Eyes On U.S. — How White House Climate Action Could Spark A Global Trade War
When the U.S. Congress passed the Biden administration’s landmark "green" spending bill in August, environmentalists around the world saw it as a very strong — and long overdue — step in the right direction on climate change.
For years, the European Union’s far more stringent environmental regulations have produced a more carbon-efficient economy and vastly lower CO2 emissions per capita — and EU leaders have demanded that the U.S. do its part in tackling climate change.
But what many missed in the new legislation — which included $400 billion in green-focused subsidies — was that it risked playing out in a way that could effectively trigger a trade war. That the legislation was dubbed the “Inflation Reduction Act” (IRA), to help many in Congress justify a "Yes" vote may have been a clue that economic concerns could ultimately trump all the lofty rhetoric about saving the planet.
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So now, over the past few weeks, U.S. allies have been left seeing red rather than green, reading in between the lines of climate action a healthy dose of “America First.” The Korea Herald writes that the IRA could have major negative impacts on its national automakers Hyundai and Kia, with a delegation from Seoul currently in Washington hoping to convince U.S. officials to make changes to the bill’s “Buy American” clauses.
America First, Europe Last.
For Europe, the “Buy American” provisions in the legislation represent a direct threat to its economy and industrial base — a shot taken right when the Continent is bearing the major part of the economic costs of Russia’s war against Ukraine.
“Joe Biden wants to strengthen the American economy — at the expense of Europe,” writes German weekly Die Zeit. “America First, Europe Last,” declares French business daily Les Echos.
Die Zeitexplains to its readers that because the U.S. Congress won’t approve a carbon tax, emissions trading, or strict environmental regulation. Biden is forced to pursue climate action through “subsidies and trade barriers, and thus provokes his allies in Europe.”
In the EU, green subsidies, like a rebate on the purchase of an electric vehicle, are available to consumers no matter where the automobile (or a solar panel, or wind turbine) was produced. But the nearly $400 billion IRA ties the subsidies to production located in the United States, with special waivers for Canada and Mexico.
Europe’s concern is that it is facing a double punch: high energy prices as a result of Russia’s invasion of Ukraine (LNG imported from the U.S. costs Europe four to five times as much as it does in the U.S. domestically), coupled with the new round of U.S. subsidies that may lure European manufacturers to relocate to the U.S.
Illustrating European fears, “Next year the battery manufacturer Northvolt will decide whether to build a new factory in the U.S.,” reports Sweden’s Dagens Industri.
French daily Le Monde’s Dec. 3 front page features Biden and Macron’s “uncompromising friendship”
Reporting on French President Emmanuel Macron’s state visit last Friday to the U.S., Le Mondetakes note of Macron’s insistence that the IRA’s “protectionist” measures threatened “fragmenting the West” at a time when unity on Russia was paramount. While France would like the Biden administration to offer the same waivers for European firms as are offered to Canadian and Mexican ones, it is also urging equivalent subsidies and “Buy European” legislation at an EU level in response.
Turn-based daily La Stampa notes that Italian automakers are more concerned about the entry of Chinese EVs into the European market (with scant possibility for reciprocity) whereas German automakers are more concerned about the IRA. Though the concerns come from different directions, they note that the “Buy European” legislation could potentially placate both.
Chinese state broadcaster CGTN was quick to pick up on the tensions, calling the IRA “hegemonic.” It’s a reminder that, as a Czech diplomat pointed out, the biggest winner in any EU-U.S. trade war would be … China.
— Alex Hurst
In other news …
🛳 SO AMERICAN
It has been called the “the Walmart of the Seas. A German travel journalist invites you to come aboardCarnival Celebration, the recently-christened mega ship cruising off the coast of Florida. This floating city (it can accommodate 5,800+ passengers) is a bonafide U.S. extravaganza: It includes burger joints, Miami-themed areas complete with pink flamingos, as well as an open-air rollercoaster. As the reviewer tongue-in-cheekily puts it, “in spite of — or perhaps because” it is so typically American, “you will be surprised how charming the ship is.”
🤖💀 IN BRIEF
U.S. police kill more people per year than their counterparts in almost any other country, and now they can even outsource the job. Newspapers in Portugal, Italy and France reported (with various degrees of shock) that the San Francisco Police Department is deploying “killer robots.” That is, robots with the authorization to use lethal force and take human life.
As Spain's El Pais notes, it is perhaps yet another step in the militarization of U.S. police departments as spillover from the Iraq War.
⚽️ OOH BURN!
A cheeky exchange took place between Dutch Prime Minister Mark Rutte and U.S. President Joe Biden after the Netherlands beat the American team at the World Cup in Qatar. Responding to Biden’s pre-match video that saw him mock-argue that the beautiful game ought to be called “soccer,” the American way, and not “football,” Rutte jokingly tweeted “Sorry Joe, football won.”