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In 2024, the Atlantic Council initiated a research series focused on the future of U.S. industry amid a world increasingly prioritizing decarbonization. This project explored how U.S. policy could foster a sustainable, efficient industrial base without relying on significant new budget allocations. The central objective was to discern how America can maintain competitive standing in a global market where both allies and rivals are committed to investing in clean technologies and lower carbon production.

The research involved several workshops, engaging a diverse array of stakeholders across public and private sectors, culminating in two significant reports: "Reducing U.S. Industrial Emissions Under Budgetary Uncertainty," published in November 2024, and "Building for Tomorrow: Preparing U.S.

Industry to Compete in a Lower Carbon Global Economy," released in June 2025. Each report, crafted in different political contexts, highlighted the challenges and opportunities inherent in enhancing sustainable competitiveness across key industrial pillars. They collectively advocated for the expansion of the U.S. industrial decarbonization toolkit as a strategic imperative, highlighting its importance for economic viability and geopolitical stability.

Since the second report's publication, the landscape of U.S. industrial and energy policy has shifted dramatically. The return of the Trump administration has seen a resurgence of policies favoring fossil fuels, including attempts to reverse crucial climate analyses established during the Obama era. Legislative actions, particularly the recent budget reconciliation law, have led to significant reductions in federal incentives for clean energy and emerging technologies—essential components identified in the research for advancing sustainability across industries, including iron, steel, and aviation.

In this rapidly changing environment, one might question the feasibility and value of U.S. industrial decarbonization as a goal. However, rather than reverting to past practices, it is crucial to recognize that the global momentum behind industrial decarbonization represents a new normal.

U.S. companies must remain committed to ensuring the long-term competitiveness of the industrial sector, even amid the political turmoil emanating from Washington, D.C. The challenge of achieving durable competitiveness is intrinsically global; the present moment offers the U.S. an opportunity to assert leadership in a transformative industrial landscape or risk being sidelined as others define the future of industry.

Several trends underscore the growing significance of industrial decarbonization within a broader context. Notably, countries worldwide are increasingly integrating industrial decarbonization and low-emission technologies into their strategic objectives—not purely for environmental reasons but as a response to rising economic protectionism and resource nationalism.

As global economies redefine energy and economic security, the U.S. must recognize that industrial decarbonization technologies are emerging as vital sources of growth, revenue, and employment. China, for example, has positioned itself at the forefront of the solar, wind, and electric vehicle sectors, capitalizing on investments in low-carbon technologies while the U.S. retreats from similar initiatives.

Furthermore, the implementation of emissions trading systems (ETS) and border carbon adjustments (BCAs) is reshaping international trade dynamics. The European Union's carbon border adjustment mechanism, which targets high-emission industrial products, has catalyzed similar initiatives worldwide. As more countries adopt such measures, U.S. companies risk losing market access without corresponding regulatory frameworks, potentially jeopardizing their competitiveness.

In this environment, the U.S. retains opportunities to engage in shaping these regulatory developments. Proposals for a carbon border adjustment aligned with trade objectives could incentivize emissions reductions domestically and abroad. However, the current political climate, characterized by a deregulatory stance, risks leaving U.S. industry vulnerable to international competition, particularly as global expectations for sustainability and emissions accountability intensify.

Despite assurances from the Trump administration that deregulation will benefit U.S. manufacturing, the reality is that the evolving global landscape necessitates a more nuanced approach. As the world gains a deeper understanding of emissions and their sources, U.S. businesses must navigate these complexities while contending with investor scrutiny over sustainability performance. The prevalence of "greenhushing," where companies minimize public sustainability efforts, underscores the need for proactive engagement in decarbonization, especially as societal expectations continue to rise.

The advent of artificial intelligence (AI) and advanced technologies presents both challenges and opportunities for industrial sectors. The integration of AI can drive efficiencies and enable decarbonization strategies that were previously unattainable. As industries explore digital transformation, the potential for AI to optimize energy consumption, reduce waste, and enhance emissions accounting is substantial.

However, the path forward is fraught with uncertainty. Political volatility and shifting regulatory landscapes create challenges for long-term planning in the industrial sector. The U.S. must remain vigilant, recognizing that while immediate political conditions may fluctuate, the broader trends toward sustainability and decarbonization will persist. Embracing a forward-looking approach will be critical for U.S. industry to navigate these changes and secure its competitive edge in the years to come.

Ultimately, the choices made today will shape the future trajectory of U.S. industrial decarbonization. A failure to engage with these developments could equate to unilateral disarmament at a pivotal moment. To avert such an outcome, U.S. industry stakeholders must adopt a proactive stance, embracing the bold initiatives necessary to build for tomorrow amidst the complexities of today’s political environment.