Badenoch criticises US' Inflation Reduction Act as UK and partners plot response

Wed 22 Feb 2023
Posted by: Phillip Adnett
Trade News

Department of Business and International Trade Secretary Kemi Badenoch

Trade and business secretary Kemi Badenoch has criticised US president Joe Biden’s efforts to subsidise green technology firms.

At an event hosted by Politico yesterday (21 February), Badenoch raised concerns that the Inflation Reduction Act, signed into law by Biden, would create a “single point of failure” for supply chains when they needed strengthening and diversifying “across the board”.

Working together

She also said that various international partners were expressing similar concerns:

“The EU is very worried and we're working jointly with them on it. It's not just the EU doing stuff and we're not in the room. Japan is worried. South Korea is worried. Switzerland is worried.

“It is onshoring in a way that could actually create problems with the supply chain for everybody else.

“And that will not have the impact that it wants to have when it's looking at the economic challenge that China presents. So no, I don't think it's a good idea, not just because it's protectionist. But it also creates a single point of failure in a different place, when actually what we want is diversification and strengthening of supply chains across the board.”

As reported previously by the IOE&IT Daily Update, the European Commission is also putting pressure on the US government over the subsidies.


The legislation subsidises American companies working in green tech and provides tax credits totalling $370bn in value.

It has had a difficult reception overseas because of its perceived impact on European businesses, potentially damaging their competitiveness in the green technology fields.

US defence

Earlier on in the evening, US ambassador to the UK Jane Hartley defended her administration’s actions:

“One of the things I would say is there's going to be a huge amount of money, R&D — the technology is going to improve, the technology is going to be cheaper.

“The technology is going to be used by everyone in the world — not just the US.”

The Guardian reports that various US states – including those typically hostile to Biden’s agenda such as Texas, Kentucky and Louisiana – are seeing economic benefits since the legislation came into effect.

Chancellor response

Chancellor Jeremy Hunt also raised concerns at a separate event yesterday.

Reuters reports that Hunt called the act a “very real competitive threat” and stated that the UK was plotting a response in the coming months.

"We recognise that it is creating challenges, we don't agree with every aspect of it, but nor do we have any doubt in our ability to compete and so we need to let everyone know what the plan is,"  he said.

The chancellor said that green industries are "absolutely strategic" for the UK economy, citing government data showing that the sector was worth £41bn in 2021, employing over 430,000 people.