President Trump’s withdrawal of billions in federal funding has stalled California’s ambitious high-speed bullet train project, sparking protests and federal-state tensions, while raising concerns over immigrant deportations by Gopal Misra
During his first term, President Donald Trump had cancelled federal assistance of USD one billion to the California Bullet project in 2019. Six years later, his Administration withdrew a four billion USD financial grant to the ongoing ambitious project, a dream of Californians. In the next five years, it is expected to be connecting the state’s major cities with high-speed bullet trains. This cancellation is accompanied by accelerating the process of deportation of the immigrants, who comprise the cheaper workforce engaged in the construction.
The federal action has caused widespread protests in major cities like Los Angeles. Further, in a bid to expedite the deportation and quelling the protests, Washington has already moved federal troops and marines. It, however, is being challenged before judicial authorities as a violation of the state’s constitutional autonomy. The ongoing aggressive exchanges between the federal and state leaders appears to be a faux-paus for the country’s decision makers.
Meanwhile, FBI Director Kash Patel’s caution that the Communist Party of China (CCP) is working round-the-clock to deploy operatives and researchers to infiltrate American institutions could be traced to Washington’s apathy towards the bullet train project. However, Trump has quietly diluted the much trumpeted heavy tariff proposals against China.
Trump has done it again. It is yet to be ascertained whether his Administration has seriously studied the immediate impact and long-term implications of the denial of funds to California’s high-speed rail line project on the delicate state-federal power-sharing constitutional mechanism. It is doubtful that Trump has cared to revisit the financial strength of California, a state known as a major economic powerhouse, perhaps, the fourth largest economy in the world. Its gross domestic product in 2024 is estimated to be 4.1 trillion USD. It surpasses countries like Japan.
For the people of California, any delay in the proposed bullet train—expected to run at speeds of up to 220 miles (402 km) per hour between Los Angeles and San Francisco by 2029, and later extended to San Diego and Sacramento—is unacceptable.
Trump’s blow hot-blow bold policy towards Beijing cannot be called sudden. Therefore, few were surprised, when recently Sean Duffy, the US transportation secretary, issued a controversial compliance review report claiming that “California High Speed Rail Project is beset by mismanagement, waste and ever-growing costs”. Duffy’s observation is being interpreted as a bid to stop Chinese companies’ participation in this high-investment project. They were in the forefront of this project since 2013, when the then Governor of California, Jerry Brown, had visited China and sought China’s assistance for California’s bullet train. Meanwhile, the US secretary for treasury, Scott Bessent, and commerce secretary, Howard Lutnik, are optimistic about the ongoing tariff and trade talks between the US and China in London and Zurich, Chinese Premier He Lifeng, has so far refused to comment on the negotiations.
Therefore, if the talks do succeed, Trump’s opposition to the proposal of the China Railway International offering a comprehensive package including design expertise, construction, equipment procurement, and rolling stock may also end. It had also proposed financing from the Export-Import Bank of China to the project.
Earlier, it may be recalled that during the tenure of President Barack Obama, these shady Chinese investments were seldom discussed. In 2019, however, the federal assistance to the project was stopped. With Duffy’s criticism, who has also stated, “Here’s the cold, hard truth – there’s no viable path to complete the rail project on time or on budget. California is on notice,” thus, the issue has cropped up in the US media, being further complicated by the deployment of the federal forces. Interestingly, only last month, China had agreed to help build a high-speed link between Las Vegas and Los Angeles.
Seeking Chinese assistance
It may be noted that since 2013, the successive governors of California have been pleading with Beijing for liberal financial assistance. They used to state that China in 2012 had invested 77.6 billion USD on overseas investments; therefore, they could easily pump in 68-billion USD in the project. It was soon followed by the setting up of the China-California Joint Task Force and the California Trade Mission in China.
Seventeen years after the approval of a 10 billion USD bond to help pay for the project and a decade since construction began in the Central Valley, California high-speed rail is now facing impediments in a pivotal year that could make or break the ambitious project. It has already been beset by an ever-escalating price tag and a schedule that has slipped well beyond initial calculations. Meanwhile, the California High-Speed Rail Authority and Governor Gavin Newsom are busy working out new strategies for saving the project from being buried.
In 2017, the trade war against China during Trump’s first term, which extended during Joe Biden’s presidency, resulted in an almost ten percentage decrease in China’s share of US non-oil goods imports to 16 per cent in 2024. Yet, over this period, China’s share of global goods exports remained near its all-time high of 15 per cent. These statistics reconfirm that Trump’s anti-China trade policy has almost failed.
On the other hand, China’s highly competitive manufacturers, instead of suffering any financial loss, have embarked upon new markets across the continents. Their tie-ups with local manufacturers in other countries such as electrical vehicle producers in Germany, supporting the steel industry in Brazil, toys in Vietnam and electronics in India, have become new industrial hubs. It may appear that they are causing competition to the goods imported from China, but indirectly, are helping the Chinese economy.
In a bid to keep the project on track, Governor Newsom has decided to highlight the ongoing construction, especially in the Central Valley, instead of rebutting the federal government’s claim. The California High-Speed Rail Authority, however, has also issued a number of statements refuting the Trump Administration’s claims that they do not reflect the project’s progress. Meanwhile, Washington is also intrigued by the recent reports that the Chinese companies have offered comprehensive assistance to the project, including investment and technology support. They have proposed that under “appropriate loan conditions,” the Export-Import Bank of China could “satisfy the financing needs of the project.”
Indian Experience
In India, the construction of a bullet train between Mumbai-Ahmedabad with Japanese assistance is nearing its completion. It has enabled Indian companies like Larsen &Toubro, Megha Engineering, Infrastructures Limited (MEIL), DRA Infracon-DMRC JV and KEC International-Rahee JV to gain experience in the construction of the bullet train. It is not known whether they have made any attempt to assist in the Californian project or explored any such possibility in recent weeks.
Meanwhile, undeterred by Washington, China has recently clinched contracts in Russia, the latest in an aggressive push to procure high-speed rail deals overseas. It is likely to get such projects in Mexico and Indonesia also this year.
In New Delhi, the experts in geo-economics are dismayed by Washington’s policies towards China. They feel that the tariff issue cannot help the American economy unless the manufacturing is revived in the country. The discontinuation of the financial assistance to California Bullet Train project has an overtone of politics instead of resolving the difficulties the project is facing. The Chinese companies have already set up units in Southeast Asia and Mexico to outsource production, thus bypassing US tariffs. The US administration decision to close this loophole, threatening reciprocal tariff rates as high as 49 per cent on Vietnam, Cambodia and Bangladesh might not be as effective as claimed. In this backdrop, Newsom has said: “We have withstood these difficulties and I have all the confidence in the world that we will move forward.”
With the issue of the immigrants’ deportation haunting California, the coming weeks are expected to further unfold the implications of this confrontation between California and federal authorities, which may entail international ramifications.
