US takes aim at China’s green economy with new tariffs – but why?

Published

2 years ago

May 14, 2024

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There are at least three things Joe Biden’s new tariffs on Chinese goods are intended to achieve.

Interestingly enough, preventing Chinese goods from entering the United States (typically the main purpose of tariffs) is arguably the least important of them.

That’s because the most eye-watering of all the new tariffs – a 100% rate on electric vehicles – is being imposed on a category where China doesn’t really compete all that much. Consider: last year the US imported nearly $19bn worth of electric cars. Of those imports, a mere $370m came from China – less than 2% of the total.

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That’s not to say that China is not already a world leader when it comes to making electric cars.

Right now a large chunk of electric cars being bought in Europe and elsewhere besides are Chinese. You might even be driving one today, because most of the Chinese cars being sold on these shores don’t actually have Chinese badges – like BYD. If you have a Tesla Model 3, a Tesla Model Y, an MGs or a Polestar… you’re driving a Chinese car.

Back when cars were all about their internal combustion engines, China never used to be a motoring manufacturing powerhouse. But thanks in large part to enormous support packages, China has achieved dominance of electric car manufacture.

It has done so in part because it has invested so much not just in making those cars but, even more importantly, in making the batteries inside them – not to mention the chemicals and minerals that go inside those batteries. Look at the global electric vehicle business and China has dominance all the way down the supply chain.

It’s a similar story in much of the green technology sector. China makes the vast majority of the world’s solar panels. It’s staking out a leading position in making wind turbines, not to mention green hydrogen electrolysers and carbon capture technology.

This helps explain why the tariffs announced by the White House today are not just focused on electric cars.

There will also be a doubling of tariffs on solar panels to 50%, as well as further tariffs on steel and aluminium. The justification for the latter two is that Chinese steel and aluminium is produced with more carbon emissions than elsewhere.

They are part of a broader Biden strategy. Many assumed there would be a big shift in economic diplomacy when Mr Biden took over from Donald Trump, and that he would rescind the tariffs and rules the Trump White House imposed on Beijing.

However in reality, the Biden White House has, if anything, doubled down. They have introduced a host of new subsidies on the production of green technology (the Inflation Reduction Act) and semiconductors (the CHIPS Act), fighting China at its game.

The back story here is that the world is on the brink of a new industrial revolution. As countries around the globe push towards net zero, it necessitates a panoply of new industries – to provide the green energy and cleaner products necessary to hit that goal. And the US is determined not to allow China to win the race to build out these new industries. Hence why the White House is now going one step further with tariffs.

Economists dislike tariffs. They fret about what happened in the 1930s, when the global economy slid into depression as countries around the world followed “beggar-thy-neighbour” policies of ever-increasing tariffs. They fear this might happen again, and, frankly today’s tariffs from the White House probably make such an outcome more likely.

So why is this administration, whose Treasury Secretary Janet Yellen is hardly what you’d call a radical economist, going to such lengths? That brings us back to the other two things these new tariffs are intended to achieve.

The first is to do whatever it takes to give the US a fighting chance at competing with China at producing electric cars and solar panels. Today’s measures might be construed as a tacit admission that the subsidies in the Inflation Reduction Act aren’t helping enough in and of themselves. Whether these tariffs help anymore is an open question. China’s lead is extensive. But we’re about to find out what happens when the world’s two economic superpowers pull out all the stops to compete with each other.

The final reason for these tariffs is more prosaic – but it might actually be the most important of all (at least for Mr Biden himself). They are intended as a political message to show how tough he is on China, and to outdo Donald Trump himself. These tariffs are aimed as much at appealing to the American electorate ahead of the election as they are to affect trade with China.

Nonetheless, they will doubtless provoke some tit-for-tat tariffs from China. Trade – and industrial strategy – have never been so dramatic, or interesting.

Business

Thames Water debt pile rises further despite return to profit

Published

4 hours ago

December 3, 2025

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Thames Water debt pile rises further despite return to profit

Cash-strapped Thames Water has revealed a further rise in its debt pile while recording a return to profit on the back of inflation-busting hikes to bills.

The UK’s largest supplier said the 31% rise to customer bills since April had allowed it to increase capital investment by 22% to £1.3bn amid demands it improve performance in preventing sewage spills and stopping leaks.

Thames Water said it recorded a 20% drop in pollution incidents over the six months to the end of September, and leakage performance was holding steady despite the “extremely dry summer”.

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While waste complaints dipped by 11%, according to the company, there was a 42% surge in the number of customers complaining about the hike to bills.

Thames Water revenue rose 42% on the same period last year to £1.9bn, helping a return to profit after tax of £328m on the back of a £190m loss during April-September 2024.

The company said profitability was damaged by higher debt serving costs.

Its debt pile was recorded at £17.6bn – a rise of 5%.

The results were released against the backdrop of continuing talks involving the government and regulators over a proposed rescue deal by major Thames Water creditors.

Their consortium is known as London & Valley Water.

It effectively already owns Thames Water under the terms of a financial restructuring agreed early in the summer but regulator Ofwat is yet to give its verdict on whether the consortium can run the company, averting the prospect of it being placed in a special administration regime.

Without a deal the consortium, which includes investment heavyweights Elliott Management and BlackRock, would be wiped out.

Ofwat, which is to be scrapped under a shake-up of industry oversight, has been leading scrutiny of London & Valley’s operational plan and proposed capital structure.

The prospective deal would write off billions of pounds of the company’s debt and inject billions in fresh equity, in return for an adjustment in the regulator’s approach to future financial penalties.

Thames sees the creditors’ proposal as the only viable solution.

Despite huge hikes to household bills – allowed across England and Wales to bolster aging infrastructure including storm overflows – the company says its financial turnaround has been hampered by record fines for things like sewage leaks and bonuses to retain key staff.

Sky News revealed on Tuesday that its remuneration committee will meet next week to decide whether to proceed with nearly £2.5m in retention payments to 21 senior managers.

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Thames Water chief executive Chris Weston said the company had made good progress on its operational and transformation targets.

“This progress has all been achieved as we also manage the recapitalisation of the business. We continue to work closely with stakeholders to secure a market-led solution that we believe is in the best interests of our customers and the environment.

“This in turn will allow the transformation of Thames to continue, a programme that will take at least a decade to complete and will restore the infrastructure and operations of the company.”

Business

FIFA backs away from dynamic pricing for all World Cup 2026 tickets

Published

4 hours ago

December 3, 2025

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FIFA backs away from dynamic pricing for all World Cup 2026 tickets

FIFA has backed away from using dynamic pricing for all 2026 World Cup tickets amid concerns about the cost of attending the tournament in North America.

The organisers insisted they always planned to ring-fence tickets at set prices to follow your own team.

But the announcement comes just days ahead of Friday’s tournament draw in Washington DC, which Donald Trump plans to attend.

Fans will have to wait until Saturday to know exactly where and when their teams will be playing in next summer’s tournament.

Variable pricing – fluctuating based on demand – has never been used at a World Cup before, raising concerns about affordability.

England and Scotland fans have been sharing images in recent days of ticket website images highlighting cost worries.

But world football’s governing body said in a statement to Sky News: “FIFA can confirm ringfenced allocations are being set aside for specific fan categories, as has been the case at previous FIFA World Cups. These allocations will be set at a fixed price for the duration of the next ticket sales phase.

“The ringfenced allocations include tickets reserved for supporters of the Participating Member Associations (PMAs), who will be allocated 8% of the tickets for each match in which they take part, including all conditional knockout stage matches.”

FIFA says the cheapest tickets are from $60 (£45) in the group stage. But the most expensive tickets for the final are $6,730 (£5,094).

There will also be a sales window after the draw from 11 December to 13 January when ticket applications will be based on a fixed price for those buying in the random selection draw.

It is the biggest World Cup with 104 matches after the event was expanded from 32 to 48 teams. There are also three host nations for the first time – with Canada and Mexico the junior partners.

FIFA defended using fluctuating pricing.

“The pricing model adopted for FIFA World Cup 26 reflects the existing market practice for major entertainment and sporting events within our hosts on a daily basis, soccer included,” FIFA’s statement continued.

“This is also a reflection of the treatment of the secondary market for tickets, which has a distinct legal treatment than in many other parts of the world. We are focused on ensuring fair access to our game for existing but also prospective fans.”

The statement addressed the concerns being raised about fans being priced out of attending.

FIFA said: “Stadium category maps do not reflect the number of tickets available in a given category but rather present default seating locations.

“FIFA resale fees are aligned with North American industry trends across various sports and entertainment sectors.”

Ireland, Northern Ireland and Wales could also still qualify.

Business

Rachel Reeves hit by Labour rural rebellion over inheritance tax on farmers

Published

7 hours ago

December 3, 2025

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Rachel Reeves hit by Labour rural rebellion over inheritance tax on farmers

Chancellor Rachel Reeves has suffered another budget blow with a rebellion by rural Labour MPs over inheritance tax on farmers.

Speaking during the final day of the Commons debate on the budget, Labour backbenchers demanded a U-turn on the controversial proposals.

Plans to introduce a 20% tax on farm estates worth more than £1m from April have drawn protesters to London in their tens of thousands, with many fearing huge tax bills that would force small farms to sell up for good.

MPs voted on the so-called “family farms tax” just after 8pm on Tuesday, with dozens of Labour MPs appearing to have abstained, and one backbencher – borders MP Markus Campbell-Savours – voting against, alongside Conservative members.

In the vote, the fifth out of seven at the end of the budget debate, Labour’s vote slumped from 371 in the first vote on tax changes, down by 44 votes to 327.

‘Time to stand up for farmers’

The mini-mutiny followed a plea to Labour MPs from the National Farmers Union to abstain.

“To Labour MPs: We ask you to abstain on Budget Resolution 50,” the NFU urged.

“With your help, we can show the government there is still time to get it right on the family farm tax. A policy with such cruel human costs demands change. Now is the time to stand up for the farmers you represent.”

After the vote, NFU president Tom Bradshaw said: “The MPs who have shown their support are the rural representatives of the Labour Party. They represent the working people of the countryside and have spoken up on behalf of their constituents.

“It is vital that the chancellor and prime minister listen to the clear message they have delivered this evening. The next step in the fight against the family farm tax is removing the impact of this unjust and unfair policy on the most vulnerable members of our community.”

The government comfortably won the vote by 327-182, a majority of 145. But the mini-mutiny served notice to the chancellor and Sir Keir Starmer that newly elected Labour MPs from the shires are prepared to rebel.

Speaking in the debate earlier, Mr Campbell-Savours said: “There remain deep concerns about the proposed changes to agricultural property relief (APR).

“Changes which leave many, not least elderly farmers, yet to make arrangements to transfer assets, devastated at the impact on their family farms.”

Samantha Niblett, Labour MP for South Derbyshire abstained after telling MPs: “I do plead with the government to look again at APR inheritance tax.

“Most farmers are not wealthy land barons, they live hand to mouth on tiny, sometimes non-existent profit margins. Many were explicitly advised not to hand over their farm to children, (but) now face enormous, unexpected tax bills.

“We must acknowledge a difficult truth: we have lost the trust of our farmers, and they deserve our utmost respect, our honesty and our unwavering support.”

Labour MPs from rural constituencies who did not vote included Tonia Antoniazzi (Gower), Julia Buckley (Shrewsbury), Torquil Crichton (Western Isles), Jonathan Davies (Mid Derbyshire), Maya Ellis (Ribble Valley), and Anna Gelderd (South East Cornwall), Ben Goldsborough (South Norfolk), Alison Hume (Scarborough and Whitby), Terry Jermy (South West Norfolk), Jayne Kirkham (Truro and Falmouth), Noah Law (St Austell and Newquay), Perran Moon, (Camborne and Redruth), Samantha Niblett (South Derbyshire), Jenny Riddell-Carpenter (Suffolk Coastal), Henry Tufnell (Mid and South Pembrokeshire), John Whitby (Derbyshire Dales) and Steve Witherden (Montgomeryshire and Glyndwr).