British Secretary of State for Business and Trade, Kemi Badenoch, criticised the Biden administration’s Inflation Reduction Act (IRA) calling it a “protectionist” measure that will not stop the rise of China. The IRA promises billions in spending and tax credits for American green industries.
Badenoch made her comments February 21st at a Politico event in London, where she was speaking along with Jane Hartley, the U.S. ambassador to the UK, who vigorously defended the stimulus package.
A landmark piece of legislation for the Biden administration, the Act was passed by Congress in August 2022 and directs $370 billion to assist clean energy companies in America through tax breaks and subsidies. Actively opposed by both the EU and the UK, critics have branded the Act a stopgap measure against the rise of China that imperils European and British manufacturers.
Badenoch confirmed that the UK would not stand idly by in opposing the Act, and would cooperate with the EU and other international partners to frame a response, warning that the Act could negatively impact supply chains. Badenoch has previously outlined the UK’s objections to the Act in a letter sent to Washington in December 2022.
European officials have already lobbied the U.S. for exemptions for EU manufacturers, with the EU’s electric car manufacturing industry thought to be particularly exposed. Under the terms of the Act, only American-manufactured electric cars, or electric cars with parts from North America, would be eligible for a $7,500 tax credit.
In January, the EU Commission produced a rival subsidy plan to counter the IRA Act, reducing regulatory burdens and introducing new subsidy schemes for manufacturers. EU nations are divided over the need to channel further state subsidies into protecting the bloc’s green manufacturing sector, with Germany particularly opposed to any increase in aid.
Last week the European Parliament passed legislation that would ban the sale of fossil fuel-powered vehicles by 2035 in a move designed to help the bloc’s manufacturers.
