SFAA Policy Brief: Trump Administration’s Approach to Infrastructure

The new Administration is moving quickly on a host of priority agenda items through Executive Orders and requests to Congress. With this in mind, The Surety & Fidelity Association of America (SFAA) would like to provide a synopsis of priorities in critical areas to the industry on how these policy changes may play out in the months to come:

“Stargate”: Date Storage/ AI Investment Partnership

• President Trump recently announced a proposal for a joint venture with private industry planning to invest up to $500 billion for artificial intelligence (AI) infrastructure.
• The new entity, Stargate, includes OpenAI, Oracle, and SoftBank. The group will begin building data centers and electricity generation with an initial investment of $100 billion, with the potential to scale up to $500 billion by 2028.

SFAA View

• AI is here to stay. The Trump Administration’s announcement supports estimates predicting over $1 trillion in AI investments over the next five years.
• A large portion of these investments will go toward building data centers.
• Stargate plans to build data centers in 16 states, with SFAA expecting them nationwide.
• Bonding opportunities exist for these projects to help assess risk and ensure reputable contractors are hired.
• The fast-paced timeline of these projects increases the need for bonding.
• SFAA will work to identify key contacts in the Administration to pursue bonding opportunities for Stargate projects.

Tariffs and Material Prices

• President Trump is moving forward to initiate tariffs on goods from several key countries, including China, Mexico and Canada, in addition to unilateral tariffs on countries that do so to the United States.
• As of February 4th, a 10% tariff has been imposed on all goods coming from China.
• A 25% tariff on all goods from both Mexico & Canada was recently delayed for one month after the U.S. made separate agreements with both countries to enhance border security and combat the flow of fentanyl into the U.S.
• On February 10th, President Trump issued Executive Orders to implement 25% tariffs on all steel and aluminum imports into the U.S. The tariffs will apply to all countries without exemptions or production exclusions. Canada and Mexico account for more than one-third of all steel imports into the U.S., with Brazil, South Korea and Vietnam also accounting for large shares of steel imports. Concerning aluminum imports, Canada will bear the brunt as the country imported more than half of the 5 million metric tons into the U.S. last year.

SFAA View

• Tariffs imposed by President Trump are primarily negotiating tools, as seen in agreements with Mexico and Canada, and will likely extract concessions on other priority agenda items.
• Tariff negotiations are expected to continue through much of 2025.
• Long-term tariffs are unlikely, as the Administration prioritizes economic growth and a strong stock market.

Immigration and Labor

• President Trump has been vocal about his intent to focus on immigration policy in his second term, having already signed multiple Executive Orders cracking down on illegal migrants.
• An estimated 20% of construction workers lack permanent legal status in the U.S., which poses a significant potential threat to the labor force.

SFAA View

• President Trump is focused on illegal migrants who have committed crimes or have not started the path to legal citizenship or employment.
• Immigrants who are employed and working toward legal status do not appear to be targets.
• Temporary labor shortages may occur in industries like construction and infrastructure.
• Long-term workforce shortages are possible, especially if the Administration broadens its approach to immigration policy to include all migrants illegally residing in the U.S.

Department of Transportation Funding

• The U.S. Department of Transportation (USDOT) has announced a temporary pause on the disbursement of funds from the Infrastructure Investment & Jobs Act (IIJA) and Inflation Reduction Act (IRA), including funding that Congress has already authorized. The directive was included in a January 20th Executive Order, “Unleashing American Energy.”
• According to the Administration, the pause in funding from both laws is necessary to “review their processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds for consistency with the law.” The Executive Order requires federal agencies, including USDOT, to provide a report by April 20, assessing the frozen spending and how it aligns or does not align with the new Administration’s energy goals. This is functionally known as “impoundment”, a contested effort by the executive branch contesting to congressional spending in which they do not agree.
• The Administration has also taken steps to halt specific programs ahead of the 90-day Administrative review process, including the National Electric Vehicle Infrastructure (NEVI) program. The $5 billion initiative to build charging stations for electric vehicles was halted in a February 6th letter from the Federal Highway Administration (FHWA) to state transportation directors announcing the suspension of the annual implementation plans submitted for Fiscal Years 2022 – 2025. States will be allowed to receive reimbursements for existing obligations for stations not to disrupt current financial commitments. FHWA aims to publish new draft guidance on the NEVI program by Spring 2025, followed by a comment period that SFAA intends to engage in.

SFAA View

• The Executive Order on energy is expected to be limited in scope.
• The Office of Management & Budget (OMB) issued a memo on January 21st clarifying that the directive will primarily target “Green New Deal” initiatives. The memo also states that agency heads retain discretion over fund disbursement after consulting with OMB.
• Potential Impact on Funding: o While the Green New Deal appears to be the main focus, some grant programs and loans may face short-term freezes.
  •  IRA funding: 93% of these funds have already been disbursed.
  • IIJA funding: Prefunded through advanced appropriations and the Highway Trust Fund.
  • Primarily structured as formula dollars and annual block grants for state road and water infrastructure projects.
  • Politically challenging to claw back these funds permanently, if even possible.
• Legal Challenges & Future Outlook: 
  • The directive is expected to face numerous lawsuits.
  • Regardless of the outcome, SFAA does not believe funding for the Water Infrastructure Finance & Innovation Act (WIFIA) and the Transportation Infrastructure Finance & Innovation Act (TIFIA) is at risk.