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Plans to impose targets for electric heat pump sales on gas boiler manufacturers could be confirmed as early as next week, after fierce debate within government and intense lobbying from industry to abandon the policy.

Sky News understands energy secretary Claire Coutinho had intended to ditch the policy, known as the Clean Heat Market Mechanism (CHMM), but will now proceed following objections from ministerial colleagues, who argued that it is crucial to decarbonising home heating and meeting wider net zero policy.

Manufacturers have warned the policy will increase the cost of boilers.

In a concession to the industry, fines for missing electric heat pump targets will be pushed back by 12 months to April 2025.

Ms Coutinho is also expected to refer several major gas boiler manufacturers to the Competition and Markets Authority for potentially colluding over price increases of up to £120 on gas boilers, imposed to cover potential fines that they described as a “boiler tax”.

The long-awaited announcement comes after weeks of tension in the Department for Energy Security and Net Zero (DESNZ).

Ms Coutinho’s intention to bow to gas industry pressure met opposition from ministers Lord Callanan, the minister for energy efficiency, and Graham Stuart, the minister for energy security and net zero, who were both reported to have considered resigning.

Sky's Kay Burley asked energy secretary, Claire Coutinho, whether she would appeal to the organisers to cancel their march.

She said those taking part "should think very carefully - it would very out-of-touch."
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Energy secretary Claire Coutinho

The tension surfaced in parliament on Wednesday, when Lord Callanan told peers the government would press ahead with the CHMM, in marked contrast to Ms Coutinho’s public position that no final decision had been made.

“Of course there is no such thing as a boiler tax and therefore it is impossible to scrap it; but if the noble Earl is asking about the clean heat market mechanism – which is not a boiler tax – we will be implementing it [the CHMM] because it is an essential part of meeting that 600,000 target [for heat pumps] and, of course, our carbon budgets,” he said.

After his comments, sources close to Ms Coutinho maintained that no decision had been made, and in a statement DESNZ did not repeat his commitment to introduce the CHMM.

A spokesman for DESNZ said: “We remain committed to our ambition of installing 600,000 heat pumps a year by 2028.

“We want to do this in a way that does not burden consumers, which is why we’ve increased our heat pump grants by 50 per cent to £7,500 – making it one of the most generous schemes in Europe.”

While the gas boiler and heating industry was confident the policy would be abandoned, it now faces the prospect of a CMA inquiry into the conduct of major manufacturers.

Under the CHMM, manufacturers will be required to ensure 4% of total sales are electric heat pumps, or face fines of £3,000 for every unit by which they miss the target.

In response, manufacturers including Worcester Bosch and Vaillant announced that they would be adding up to £120 to the cost of gas boilers, saying they had no choice in order to offset potential fines.

Piggy bank on a radiator. Pic: File/PA
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What will happen to the cost of heating in future? Pic: File/PA

The increases were imposed by several manufacturers in January, and the CMA will be asked to examine whether the action was coordinated.

“It is very difficult to prove collusion but if the moves were co-ordinated and a result of industry-wide moves then that is potentially a breach of competition law,” said a Whitehall source.

The CHMM is considered a key part of the government’s net zero plans to accelerate the decarbonisation of home heating. Around 1.5 million gas boilers were installed in homes last year, compared to just 60,000 air-source heat pumps.

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December: Cost of replacing boiler to soar

Last year the government increased the grant to consumers replacing gas boilers with heat pumps from £5,000 to £7,500, prompting a spike in applications.

The aim is to reduce emissions from home heating and hot water, which accounts for 16% of national carbon emissions, and a similar market model has been introduced to the automotive sector to increase electric vehicle sales.

The renewables industry has been pressing for the government to go ahead with the CHMM, warning that any watering down of the policy would undermine momentum to decarbonise 23 million homes.

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Donald Trump’s tariffs will have consequences for globalisation, the US economy and geopolitics

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Donald Trump's tariffs will have consequences for globalisation, the US economy and geopolitics

For decades, trade and trade policy has been an economic and political backwater – decidedly boring, seemingly uncontroversial. 

Trade was mostly free and getting freer, tariffs were getting lower and lower, and the world was becoming more, not less, globalised.

But alongside those long-term trends, there were some serious consequences.

Trump latest: US president announces sweeping global trade tariffs

Mature, developed economies like the UK and US became ever more reliant on cheap imports from China and, in the process, saw their manufacturing sectors shrink.

Large swathes of the rust belt in the US – and much of the Midlands and North of England – were hollowed out.

And to some extent that’s where the story of Donald Trump’s “Liberation Day” really began – with the notion that free trade and globalisation had a darker side, a side he wants to remedy via tariffs.

More on Donald Trump

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Trump’s tariffs: Ed Conway analysis

He imposed a set of tariffs in his first term, some on China, some on specific materials like steel and aluminium. But the height and the breadth of those tariffs were as nothing compared with the ones we have just heard about.

Not since the 1930s has the US so radically increased the level of tariffs on all nations across the world. Back then, those tariffs exacerbated the Great Depression.

It’s anyone’s guess as to what the consequences of these ones will be. But there will be consequences.

Consequences for the nature of globalisation, consequences for the US economy (tariffs are exceptionally inflationary), consequences for geopolitics.

President Trump with his list of tariffs for various countries. Pic: Reuters
Image:
Imports from the UK will face a 10% tariff, while EU goods will see 20% rates. Pic: Reuters

And to some extent, merely knowing that little bit more about the White House’s plans will deliver a bit of relief to financial markets, which have fretted for months about the imposition of tariffs. That uncertainty recently reached unprecedented levels.

But don’t for a moment assume that this saga is over. Nothing of the sort. In the coming days, we will learn more – more about the nuts and bolts of these policies, more about the retaliatory measures coming from other countries.

We will, possibly, get more of a sense about whether some countries – including the UK – will enjoy reprieves from the tariffs.

To paraphrase Churchill, this isn’t the end of the trade war, or even the beginning of the end – perhaps just the end of the beginning.

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Donald Trump announces sweeping global trade tariffs – including 10% on UK imports

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Donald Trump announces sweeping global trade tariffs - including 10% on UK imports

Donald Trump has announced a 10% trade tariff on all imports from the UK – as he unleashed sweeping tariffs across the globe.

Speaking at a White House event entitled “Make America Wealthy Again”, the president held up a chart detailing the worst offenders – which also showed the new tariffs the US would be imposing.

“This is Liberation Day,” he told a cheering audience of supporters, while hitting out at foreign “cheaters”.

Follow live: Trump tariffs latest

He claimed “trillions” of dollars from the “reciprocal” levies he was imposing on others’ trade barriers would provide relief for the US taxpayer and restore US jobs and factories.

Mr Trump said the US has been “looted, pillaged, raped, plundered” by other nations.

President Donald Trump holds a signed executive order during an event to announce new tariffs in the Rose Garden of the White House, Wednesday, April 2, 2025, in Washington. (AP Photo/Evan Vucci)
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Pic: AP

His first tariff announcement was a 25% duty on all car imports from midnight – 5am on Thursday, UK time.

Mr Trump confirmed the European Union would face a 20% reciprocal tariff on all other imports. China’s rate was set at 34%.

The UK’s rate of 10% was perhaps a shot across the bows over the country’s 20% VAT rate, though the president’s board suggested a 10% tariff imbalance between the two nations.

It was also confirmed that further US tariffs were planned on some individual sectors including semiconductors, pharmaceuticals and critical mineral imports.

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Trump’s tariffs explained

The ramping up of duties promises to be painful for the global economy. Tariffs on steel and aluminium are already in effect.

The UK government signalled there would be no immediate retaliation.

Business and Trade Secretary Jonathan Reynolds said: “We will always act in the best interests of UK businesses and consumers. That’s why, throughout the last few weeks, the government has been fully focused on negotiating an economic deal with the United States that strengthens our existing fair and balanced trading relationship.

“The US is our closest ally, so our approach is to remain calm and committed to doing this deal, which we hope will mitigate the impact of what has been announced today.

“We have a range of tools at our disposal and we will not hesitate to act. We will continue to engage with UK businesses including on their assessment of the impact of any further steps we take.

“Nobody wants a trade war and our intention remains to secure a deal. But nothing is off the table and the government will do everything necessary to defend the UK’s national interest.”

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Who showed up for Trump’s tariff address?

The EU has pledged to retaliate, which is a problem for Northern Ireland.

Should that scenario play out, the region faces the prospect of rising prices because all its imports are tied to EU rules under post-Brexit trading arrangements.

It means US goods shipped to Northern Ireland would be subject to the EU’s reprisals.

The impact of a trade war would be expected to be widely negative, with tit-for-tat tariffs risking job losses, a ramping up of prices and cooling of global trade.

Research for the Institute for Public Policy Research has suggested more than 25,000 direct jobs in the UK car manufacturing industry alone could be at risk from the tariffs on car exports to the US.

The Society of Motor Manufacturers and Traders (SMMT) had said the tariff costs could not be absorbed by manufacturers and may lead to a review of output.

The tariffs now on UK exports pose a big risk to growth and the so-called headroom Chancellor Rachel Reeves was forced to restore to the public finances at the spring statement, risking further spending cuts or tax rises ahead to meet her fiscal rules.

Read more:
What do Trump’s tariffs mean for the UK?
The rewards and risks for US as trade war intensifies

A member of the Office for Budget Responsibility (OBR), David Miles, told MPs on Tuesday that US tariffs at 20% or 25% maintained on the UK for five years would “knock out all the headroom the government currently has”.

But he added that a “very limited tariff war” that the UK stays out of could be “mildly positive”.

He said: “There’s a bit of trade that will get diverted to the UK, and some of the exports from China, for example, that would have gone to the US, they’ll be looking for a home for them in the rest of the world.

“And stuff would be available in the UK a bit cheaper than otherwise would have been. So there is one, not central scenario at all, which is very, very mildly potentially positive to the UK. All the other ones which involve the UK facing tariffs are negative, and they’re negative to very different extents.”

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Business

Donald Trump’s tariffs will have consequences for globalisation, the US economy and geopolitics

Published

on

By

Donald Trump's tariffs will have consequences for globalisation, the US economy and geopolitics

For decades, trade and trade policy has been an economic and political backwater – decidedly boring, seemingly uncontroversial. 

Trade was mostly free and getting freer, tariffs were getting lower and lower, and the world was becoming more, not less, globalised.

But alongside those long-term trends, there were some serious consequences.

Trump latest: US president announces sweeping global trade tariffs

Mature, developed economies like the UK and US became ever more reliant on cheap imports from China and, in the process, saw their manufacturing sectors shrink.

Large swathes of the rust belt in the US – and much of the Midlands and North of England – were hollowed out.

And to some extent that’s where the story of Donald Trump’s “Liberation Day” really began – with the notion that free trade and globalisation had a darker side, a side he wants to remedy via tariffs.

More on Donald Trump

He imposed a set of tariffs in his first term, some on China, some on specific materials like steel and aluminium. But the height and the breadth of those tariffs were as nothing compared with the ones we have just heard about.

Not since the 1930s has the US so radically increased the level of tariffs on all nations across the world. Back then, those tariffs exacerbated the Great Depression.

It’s anyone’s guess as to what the consequences of these ones will be. But there will be consequences.

Consequences for the nature of globalisation, consequences for the US economy (tariffs are exceptionally inflationary), consequences for geopolitics.

President Trump with his list of tariffs for various countries. Pic: Reuters
Image:
Imports from the UK will face a 10% tariff, while EU goods will see 20% rates. Pic: Reuters

And to some extent, merely knowing that little bit more about the White House’s plans will deliver a bit of relief to financial markets, which have fretted for months about the imposition of tariffs. That uncertainty recently reached unprecedented levels.

But don’t for a moment assume that this saga is over. Nothing of the sort. In the coming days, we will learn more – more about the nuts and bolts of these policies, more about the retaliatory measures coming from other countries.

We will, possibly, get more of a sense about whether some countries – including the UK – will enjoy reprieves from the tariffs.

To paraphrase Churchill, this isn’t the end of the trade war, or even the beginning of the end – perhaps just the end of the beginning.

Continue Reading

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