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Britain trapped in EU-US trade war

The UK finds itself caught in a transatlantic trade war between the European Union and the United States

By: N. Peter Kramer - Posted: Wednesday, November 30, 2022

The US is the second-largest destination for British-made cars after the EU; and the automotive sector is one of Britain’s top good exporters. The IRA also affect cars made in the US by UK manufacturers.
The US is the second-largest destination for British-made cars after the EU; and the automotive sector is one of Britain’s top good exporters. The IRA also affect cars made in the US by UK manufacturers.

by N. Peter Kramer

In August, the US Congress passed President Biden’s Inflation Reduction Act (IRA), which grants billions of dollars in subsidies and tax breaks for, for instance, electric cars and renewable energy, but only when they are assembled and key parts such as batteries are made in the US.

The EU considers the IRA as a slap in the face by their ‘best friend’ Joe Biden, who, in their eyes, is an angel after the devil called Trump. The EU fears Washington’s subsidy policy will pull investment, particular in electric cars, away from the EU, hitting German and French carmakers very hard. Brussels is now preparing its own retaliatory package of subsidies.

The EU sent France’s President Macron (and not European Commission President Ursula von der Leyen!) to the US to talk with Biden. But Washington shows no sign of changing course. Fears of a real trade war are growing fast.

For British motor brands, the row over Biden’s IRA comes with real costs. But the UK can only look on it and politely asked Washington to soften the blow. Yet, it doesn’t look like this approach really works.

The US is the second-largest destination for British-made cars after the EU; and the automotive sector is one of Britain’s top good exporters. The IRA also affect cars made in the US by UK manufacturers.

UK Trade Secretary Kemi Badenoch has for months been urging top US officials to soften the impact of the electric car subsidies on Britain by carving out exemptions. But Britain’s options appear limited!

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