Badenoch warns ‘protectionist’ Biden against starting trade war
Joe Biden struggles during speech about nanochips in Arizona
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The UK’s International Trade Secretary Kemi Badenoch has written urgently to her US counterpart in a bid to see off a trade war initiated by Joe Biden’s government. Ms Badenoch is furious that President Biden’s controversial Inflation Reduction Act will in effect ban UK-made green technology cars from the US market by allowing massive subsidies for the struggling American sector and setting up crippling tariffs.
Ms Badenoch’s letter to her US counterpart Katherine Tai is set against a hostile view of Brexit Britain by the Biden administration.
Already Britain has shelved UK/ US trade talks because Mr Biden and senior Democrats including outgoing House Speaker Nancy Pelosi attempted to use them to try to force Britain to hand over control of Northern Ireland to the EU.
Mr Biden has associated Brexit with the rise of Donald Trump in America and also has strong ties with the powerful Irish American lobby in the Democrats who UK ministers have previously claimed get their instructions from Sinn Fein.
Instead, Britain has pursued direct trading partnerships with US states with 20 agreements signed in 2022.
But the Inflation Reduction Act and assault on UK car manufacturing has opened a potential new chapter in trade hostility from the Biden administration.
Ms Badenoch underlined British concerns about the US Inflation Reduction Act, which would effectively block British green car firms out of the American market due to massive domestic subsidies and foreign import restrictions.
She demanded that the US provides carve-outs for Britain, in the new law, which is still to be implemented.
She also warned that the protectionism brought into counter China risks attacking UK/ US trade relations.
In the letter published in the Financial Times, Ms Badenoch also warned that the new law would “harm multiple economies across the world and impact global supply chains in batteries, electric vehicles and wider renewables.”
The row could impact the EU as well, who are reportedly looking at a loophole which means that vehicles do not need to be manufactured in America to apply for a $7,500 tax credit.
But motor manufacturers in Britain are concerned.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, told the FT: “The UK and US automotive industries have a longstanding and productive relationship.
“Measures that support free and fair trade between us should, therefore, be encouraged, rather than those that seek to protect individual markets.”
There is some hope that the legislation could be interpreted to allow “allies” of the US to be included in subsidies and President Biden has previously hinted he would support that move.
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