Trump 2.0 could impact state business climate

For millennials and hipper Gen X-ers, here’s a question: Are you feeling like the “This is fine” dog in the burning kitchen? And for the Boomers, can we offer you the image of a frog sitting in a pot of quickly heating water?

Even if neither image makes sense, this much is clear: There’s a lot of uncertainty in the air right now — regardless of your political affiliation.

Many Americans, including Democratic voters, can find reasons to support an overhaul of the federal government and reprioritizing funding. And some folks, including Virginia Gov. Glenn Youngkin, when asked about federal job cuts, spending pauses and hiring freezes, say that this is what the American public mandated when it reelected President Donald Trump to his second term.

However, the sheer speed of the White House’s actions and those of Elon Musk’s Department of Government Efficiency, aka DOGE, has been accelerating faster than a turbo-charged Tesla.

Before Trump’s second inauguration, some experts said that a massive operation like the federal government can change directions only so fast. It’s like an ultra-large container ship trying to turn around in a tight space, they said. That’s no longer a maxim when it comes to the federal bureaucracy, though.

Most of the 140,000-plus civilian federal employees who live in Virginia don’t know if they’ll have jobs by the end of the year, which affects their families and state and local economies. Some federal contractors will likely be impacted too, and a few companies, such as those benefiting from USAID spending, have already laid off workers.

For many Virginians, the impact of Trump administration policies designed to slash the federal workforce, correct trade imbalances or eliminate DEI and “woke” programs may be concerns but not personal. However, once economists begin to dig under the surface and consider the impact of Trump and Musk’s fast-moving actions, they may start to hit home.

It’s a big if, but if a federal funding freeze ultimately happens, it could deeply affect Virginia’s economy beyond federal workers losing their jobs. Tennessee-based Microporous, which intends to employ more than 2,000 people in a new $1.36 billion battery separator manufacturing plant in Pittsylvania County, was awarded $100 million by the U.S. Department of Energy under President Joe Biden.

That grant is supposed to start April 1 and run through March 31, 2028, and during that time, Microporous would submit expenses for reimbursements and receive payments from the federal government.

Now, amid a Trump administration that is actively opposed to green energy efforts, who knows what could happen?

And even if that particular grant remains in place, will the Department of Energy be able to issue payments promptly with a smaller staff? How about Micron Technologies, which plans to build a $2.17 billion DRAM chip manufacturing facility in Manassas? It was awarded $275 million in federal funding in a nonbinding agreement with the U.S. Department of Commerce last year.

There are other companies planning expansions in Virginia that won federal funding during the Biden administration’s final months, money that’s now in question. This may come down to shareholders’ appetite for risk, but if any of these projects are indefinitely postponed or canceled, Virginia as a whole will incur economic injury.

Then there are the hospital systems and Virginia’s research universities that rely heavily on federal money to care for patients and conduct clinical tests to find new cures and treatments.

All of this could also impact Virginia’s status as the six-time winner and current No. 1-ranked champion in CNBC’s annual America’s Top States for Business rankings.

For now, Virginia’s government and business leaders are in a holding pattern.