Concerns of a transatlantic trade war are growing after the US passed its $369billion (£307bn) program of green subsidies. Congress passed the program in August as part of Joe Biden’s Inflation Reduction Act (IRA).
Meanwhile, the EU is concerned that the subsidy programme in Washington will move investments away from the Continent which will impact car manufacturers.
Though the EU is planning its own set of subsidies in retaliation, the US seems unmoved and unlikely to change its mind.
Reports show that the EU is planning what may be billions in subsidies for its industries which are set to be hit by the US subsidy package which leaves the UK to be battered by both the US and EU.
As a result of leaving the EU, the UK is abandoned in between the two sides and trying to convince Washington to step down slightly which may see the UK negatively impacted by the US and the EU.
According to UK officials, Kemi Badenoch has been privately talking to the US to reduce its limitations on electric vehicle subsidies on Britain by giving exemptions.
Badenoch “raised this issue on many levels” with US Ambassador to Britain Jane Hartley, Secretary Raimondo, “and with members of the Biden administration and senior representatives of both parties”.
Sam Lowe, a partner at Flint Global and expert in UK and EU trade police told Politico: “It’s not in the UK’s interest for the US and EU to go down this route.
“Given the UK’s current economic position, it really can’t afford to engage in a subsidy war with both.”
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Following the difficult political and economic period of the Truss-era, Rishi Sunak’s Government is attempting to encourage markets and the British public by reducing fiscal spending.
Biden’s subsidy package spells worry for UK car manufacturers after the US is the second-largest importer of British vehicles following the EU.
Jaguar Land Rover and other producers have warned that the new US program poses “very serious challenges”.
The Society of Motor Manufacturers and Traders said that Biden’s package has “elements of concern that risk creating an uneven competitive environment, with UK-based manufacturers and supplies potentially penalised.”
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In a blow to Badenoch, a US-based representative of a major business group said: “The US is minimally focused on how any of their policies are going to impact the UK.”
He added that the UK and US are “very close allies” but that officials in the US “just don’t really view the UK as an interesting trade partner and market right now”.
However, the UK can breathe some sort of sigh of relief as the US continues discussions on how to implement its law and how it will impact trade allies.
According to the business figure, he said that this point may “alleviate a lot of the concerns coming out of the UK”.