Zero: How the Financial System Can Work for Climate
Even with all the turmoil of the past few months, the energy transition isn't taking a break. Last year, global spending on clean-energy technologies was more than $2 trillion, according to BloombergNEF. Yet only a small fraction of that money makes its way to developing countries. This week on Zero, Avinash Persaud, climate advisor to the president of Inter-American Development Bank, joins our Moving Money series, and answers the question: how do we make the financial system work for climate action, not against it?
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Business Insider
10 hours ago
- Business Insider
UK backs Nigerian trade goals with 99% duty-free export access
The United Kingdom has reaffirmed that 99% of goods exported from Nigeria will continue to enjoy duty-free access under its Developing Countries Trading Scheme (DCTS), a move seen as vital for Nigeria's non-oil export ambitions and bilateral trade growth. The UK confirmed 99% of Nigerian exports will remain duty-free under the Developing Countries Trading Scheme (DCTS). This scheme benefits Nigerian non-oil products, particularly in agriculture and raw materials, for UK's market access. Nigerian government aligns this opportunity with its Zero-Oil Plan to diversify economic exports and improve infrastructure. The confirmation was made during a courtesy visit by the British High Commissioner to Nigeria, Dr Richard Montgomery, to Nigeria's Minister of Industry, Trade and Investment, Jumoke Oduwole in Abuja. According to both parties, the DCTS remains a crucial pillar of trade relations between the two countries. The scheme, which came into force in June 2023, replaced the UK's Generalized System of Preferences. It aims to boost trade with 65 developing countries by simplifying trading rules and reducing import duties on a wide range of products. Under this arrangement, Nigerian exports especially agricultural products and raw materials will continue to access the UK market without tariffs, provided they meet the origin requirements and other scheme conditions. New trade deal supports Nigeria's efforts to grow non-oil exports Montgomery emphasized that the UK is committed to helping Nigeria fully benefit from the DCTS. He noted that while duty-free access is in place, more needs to be done to support Nigerian exporters in meeting UK market standards, including product quality, packaging, and regulatory compliance. He added that the British High Commission is actively engaging with Nigerian businesses and trade associations to create more awareness and provide technical assistance where needed. On her part, Minister Jumoke Oduwole described the UK's continued support as timely, particularly as Nigeria intensifies efforts to diversify its economy away from crude oil dependence. She reiterated that the DCTS aligns with Nigeria's national goals under the Zero-Oil Plan, which seeks to increase earnings from agriculture, manufacturing, and creative exports. She also revealed that the Federal Government is working closely with stakeholders to scale up export readiness across multiple sectors, including the removal of logistics barriers, improving port infrastructure, and ensuring that exporters are educated on documentation and compliance. With the UK standing as one of Nigeria's top trading partners, the decision to uphold duty-free treatment under the DCTS reinforces Britain's post-Brexit trade approach while providing Nigerian exporters with a stable and preferential gateway into a high-value international market.
Miami Herald
3 days ago
- Miami Herald
Trump move to tax money sent abroad could devastate Latin America, Caribbean economies
A proposed tax on the money sent by immigrants in the United States to friends and families back in their home countries could have unintended devastating consequences for US. national security and for receiving countries, especially those in Latin America and the Caribbean that have come to heavily rely on the funds, experts warn. The 3.5% tax on remittances, which are not currently taxed, is among several provisions tucked inside President Donald Trump's 'One, Big, Beautiful Bill' tax and spending plan that House Republicans narrowly passed last month. Senate Republicans are now trying to agree on a version before sending it to the floor for a vote ahead of July 4, the deadline Trump has set for it to hit his desk. While there are some notable differences between what the House passed and what the Senate Finance Committee published on Monday, the proposed tax on remittances still risks pushing migrants to use unregulated and unlicensed networks to send money to their home countries and plunging countries like Haiti, where the money represents a key source of family income, deeper into economic hardship. It also requires U.S. citizens, green-card holders and anyone with a Social Security number to provide that information before they can send money abroad. 'We did a conservative estimate of the impact of these flows and it will have an effect of reducing transfers by at least 5% in the next year,' said Manuel Orozco, director of Migration, Remittances and Development Program at the Inter-American Dialogue in Washington. Orozco said that will have a devastating effect for countries in Central America along with the four nations — Cuba, Haiti, Nicaragua and Venezuela — that were recently part of a Biden-era humanitarian parole program now being targeted by the Trump administration. Earlier this month the Supreme Court ruled that the Department of Homeland Security can deport beneficiaries of the program that had allowed them to temporarily stay and work in the U.S. for up to two years, while Trump's decision to end the program is being litigated in the courts. Last week, the administration began sending revocation letters to about 500,000 recipients of the program, urging them to leave the U.S. on their own. Many of those targeted are also enrolled in Temporary Protected Status, another benefit that the administration is seeking to end after rolling back their end dates. 'On the one hand, the Temporary Protected Status and the humanitarian parole is being discontinued for people from these four nationalities,' Orozco said. 'On the other hand, you have the tax increase for those nationalities who happen to be much less likely to have a social security number because they arrived recently, they escaped their home country for political reasons or due to state fragility or state failure as in the case of Haiti.' In the case of Haiti, which has become highly dependent on remittances, 'you're dealing with a time bomb,' said Orozco, who found that for every $10 dollars remitted to Haiti in 2020 — when the country received $3.8 billion from abroad — at least $8 came from the U.S. 'The impact of this tax on Haiti will be devastating because there are 500,000 Haitians' at risk of losing their legal right to stay in the U.S. in August., Orozco said. 'Haiti's dependence on remittances is significant in a moment where … the state has already collapsed, and income basically depends on remittance flows. So the implications of these are far more complex.' But Haiti's remittance flows, which surpassed $4 billion last year according to its central bank, are not the only ones that risk taking a hit should the tax provision pass. Central American nations with economies weakened by years of instability and insecurity also will be hurt. Orozco cites the case of Guatemala, where he recently examined 15 years' worth of data through 2024. A 1% increase in remittances, Orozco said, led to a 15% increase in the country's GDP. 'Remittances have increased an average of 13% for the past 15 years,' he said. 'If remittances were to fall 10%, you will have an economic recession in Guatemala, because a 1% decrease will decelerate the Guatemalan economy substantially for more than four months.' The decline, he said, would be much more severe in Honduras, where a 1% increase in remittances increased the GDP by 33%. In both Central American nations, remittance income accounts for 30% of private consumption and any decline will have a direct effect on gross domestic product, GDP, Orozco said. 'You will have a big blow in these countries' economies,' he said. On Wednesday, Orozco was part of a conversation about the effects of the legislation on family remittances. Fellow panelists Kathy Tomasofsky, the executive director of Money Services Business Association, and Marina Olman-Pal, chair of the Legal & Regulatory Affairs Committee of the Financial & International Business Association, said many questions that remain about the legislation. The Senate version appears to focus on cross-border transfers that are initiated in cash and being sent to family members, Olman-Pal said. Transfers funded with debit or credit cards appear to be excluded in the Senate version. The original tax got scaled back from 5% to 3.5%. While the House version required senders to be U.S. citizens, the Senate version expands the universe to include those with social security numbers that allow them to work. It also offers more exemptions ,such as individuals using debit and credit cards to transfer money abroad. In the version released by the Senate Finance Committee on Monday, the tax must be collected by the remittance company and paid quarterly to the Treasury Department. 'For an American citizen, a green card holder that has that Social Security information, you are going to now have to complete a form and hand over that information to your cashier in order to affect the transfer,' said Tomasofsky. 'The business company, that small business, is going to have to set up a procedure to collect the information, to store that information. There are concerns about privacy.' Tomasofsky said the industry has made significant strides in the last 20 years, but the new reporting system could have an adverse effect on small grocery stores and businesses. For example, a company that only does 500 transactions a month may opt to get out of the business after deciding it's not worth the extra compliance. 'I'm not certain that it's going to provide any benefit to anyone in the long run because of it,' she said. Olman-Pal said while social security numbers are protected under federal and state law, there is a risk associated with increased collection. She agrees with Tomasofsky that the cost of banking could also go up as a result of the legislation's new requirements. 29 bills on taxing remittances The motivation for such legislation varies depending on the proponent. Some say it's intended to discourage unauthorized migration. Some others say it's a means to raise revenue, while some proponents accuse migrants of not paying taxes and say it's a way to tax them indirectly. Orozco and the others caution against all of these assumptions, noting that studies show that migrants, regardless of immigration status, do file taxes and in some cases the money they send home has discouraged migration to the U.S. Still, this past year, 18 states have proposed 29 different bills on taxing remittances, Tomasofsky said. In all but one instance, Tomasofsky said, the industry was able to push back 'by demonstrating how many unintended consequences there are in this bill, and the states have not moved those bills forward.' But this is the first time that the push to tax remittances, which already come with high fees, has reached a level where there appears to be political appetite for approving it. 'The motivations may be political, but everything is about the fine print, the content of what you try to come up with, and the adverse effect that it can have, the backfiring effect,' Orozco said. To underscore his point, he brought up the case of Ghanaians living in Europe and an analysis of the global money transfer market and the relationship between stiff regulations and higher transaction costs. As a result of the stiffer controls on the origination and destination of remittances, nationals of Ghana in Europe, for example, turned to informal channels, Orozco said. 'Statistically, for a 1% increase in the transaction cost the use of informal fund transfers will increase by 6% but also, there is a cost element to it,' he said. 'Immigrants don't have an infinite amount of resources. They have a very limited income capacity that in the U.S. averages to about $3,300 a month.' 'If your transaction cost goes from 3 to 6% or 6.5%, you're actually spending 1% of your monthly income just to pay those costs. And what typically people do is send less money,' Orozco added. 'So you will see one side going informal, and another side who may pay the tax but send less money.'
Los Angeles Times
3 days ago
- Los Angeles Times
Trump is turning the US into an electric vehicle laggard
President Donald Trump's efforts to unravel policies supporting electric vehicles threatens to turn the US into a laggard for years to come, according to a new report. BloombergNEF reduced both its near- and long-term EV outlook for the first time, cutting 14 million battery-powered cars from its sales projections through 2030 due to the US rollback. The researcher now sees the country trailing not only China and Europe, but also the global average adoption rate until 2040. 'Global EV sales are growing, but the national picture is more varied than ever,' BNEF analysts write in the report released Wednesday. Whereas China is expected to account for nearly two-thirds of the almost 22 million plug-in vehicles sold globally this year, in part thanks to government incentives, 'all major EV policies in the US are under fire.' Trump ordered the elimination of subsidies and other measures boosting electric vehicles during his first day back in the White House in January. His administration and the Republican-controlled Congress are heeding his directive by moving to ease national fuel-economy standards, phase out EV tax credits and strip California's ability to set its own emissions limits. BNEF's outlook assumes national gas-mileage and tailpipe regulations will revert back to where they were during Trump's first term, and that the up-to-$7,500 consumer tax credit will end for most EVs after this year. There's potential for further downside to the researcher's outlook for EV sales in the US, depending on the ultimate fate of waivers allowing states to impose more stringent clean-air rules. A coalition of states led by California Attorney General Rob Bonta sued last week to challenge the administration's move to scrap state-level policies. 'If this attempt at revoking the waiver is successful, it would have dire consequences for EV sales in California, and because of the state's oversized influence on the EV market in the country, in whole of the US,' BNEF says. 'Removing all of the supply-side mandates in the country, at the same time as demand incentives, would push down EV sales in the US sharply.' China, by contrast, is expected to keep up its momentum in transitioning to plug-in vehicles, largely due to simple economics: It's the only large market where EVs are cheaper, on average, than comparable combustion cars. Demand also is getting a boost from the government extending subsidies that encourage consumers to trade in older cars for new EVs and hybrids. BNEF predicts the country's electric vehicle market will be larger than the total US car market within the next year. 'China is emerging as a major electric vehicle manufacturing powerhouse,' BNEF says in its report, estimating that the country accounted for just shy of 70% of worldwide EV production last year. China's dominance of EV manufacturing and the battery supply chain contributed to rising trade tensions and increased tariffs since BNEF last published its annual outlook. The European Union imposed duties on imports of battery-electric vehicles from China for five years starting in October, with added tariffs ranging from 35% for MG maker SAIC Motor Corp. to 7.8% for Tesla Inc. 'Policymakers face growing tension between environmental targets and other competing policy priorities, and as a result many automakers have reduced previously announced EV goals or quietly shelved them,' BNEF says in its report, citing walk-backs by manufacturers including Toyota, Ford, Mercedes-Benz and Volvo. In addition to taking measures to protect domestic manufacturers from cheaper EVs imported from China, the EU relaxed its CO2 emissions standards by sparing manufacturers from likely fines this year and allowing companies to meet tougher targets more gradually. As a result of the change, BNEF cut its forecast for electric vehicle sales in affected markets from this year through 2027 by about 19%, or roughly 2.6 million cars. The UK — which left the EU in 2020 and has maintained relative openness to Chinese imports — has emerged as the leading major market for electric vehicles after China. BNEF expects plug-in cars to reach 40% share of the UK market by next year. Trudell writes for Bloomberg News.
