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    E.U. Relaxes Trade Rules on Electric Cars From Britain

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    The NewsThe European Union plans to postpone strict local-content rules that would have led to costly tariffs imposed on cars traded between the bloc and Britain beginning Jan. 1.“This removes the threat of tariffs on export of E.U. electric vehicles to the U.K. and vice versa,” Maros Sefcovic, the European Union’s executive vice president, told journalists in Brussels Wednesday.The tariffs would have forced consumers in Britain and the European Union to pay more for many electric vehicles. Andrew Testa for The New York TimesWhy It Matters: Relief for carmakers that were facing tariffs.The proposal provides for a three-year delay in the trade rule, and represents a huge reprieve for many carmakers, especially those with plants in Britain. Eighty percent of cars made in Britain are exported, with 60 percent of them going to the European Union. The delay means that British electric vehicles with batteries made outside Europe will no longer face tariffs of up to 10 percent starting in three weeks.European carmakers would have faced similar hits in their sales of cars to Britain, a major market. The delay will probably be seen as a win for Prime Minister Rishi Sunak’s British government, which lobbied for the change along with the European car industry.Background: Europe and Britain do not make enough batteries.The rule would have made it virtually impossible for cars made in Britain with batteries from Asia to be imported tariff-free into the European Union. Neither Britain nor the Europe Union is manufacturing enough batteries for the rising number of electric vehicles expected to be produced in coming years. Batteries are the most expensive components of electric vehicles.Local origin rules are designed to discourage automakers from importing expensive parts, and to encourage local production. But this rule would have been counterproductive, the auto industry argued, by forcing consumers to pay more for many electric vehicles. Those higher prices could have opened the door for electric vehicles from outside Europe, especially China, whose makers are churning out low-cost models that have gained traction in Britain.What Happens Next: Time for the battery industry “to catch up.”The proposal still needs the support of European Union governments. Early indications are that it will be welcomed by auto industry. An extension would give “the European battery industry time to catch up,” the Society of Motor Manufacturers and Traders, a British trade group, said Wednesday in a statement.Mr. Sefcovic also said the European Union planned to provide 3 billion euros ($3.25 billion) to encourage local manufacturing of batteries. More

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    Caen las tarifas aéreas en EE. UU., para alivio de los pasajeros

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    Las aerolíneas están comenzando a ofrecer precios de rebaja, una señal de que tienen problemas para llenar los aviones.En fechas recientes en Estados Unidos, las tarifas aéreas a muchos destinos populares han caído a su nivel más bajo en meses; incluso los viajes durante la temporada festiva son mucho más baratos que el año pasado. Esto les ha dado un respiro a los consumidores, tras meses de frustración por los elevados precios de todo tipo de bienes y servicios.La abundancia de buenas ofertas hace pensar que quizá la vigorosa recuperación de la industria aérea tras la pandemia por fin va bajando el ritmo, ya que la oferta de boletos se empareja con la demanda, que parece relativamente firme, e incluso la supera en algunas rutas.Tengamos en cuenta las tarifas que consiguió hace poco Denise Diorio, maestra jubilada de Tampa, Florida. Gastó menos de 40 dólares en un boleto de ida y vuelta a Chicago y solo pagó 230 dólares por un viaje redondo de Nueva York a París, el cual planea hacer este mes.“Les he venido diciendo a todos mis amigos que si quieren ir a alguna parte, deben comprar sus boletos ahora”, comentó.Las gangas que encontró quizá sean excepcionales, pero Diorio está en lo correcto cuando asegura que hay muchas ofertas.Este mismo mes, el precio promedio de un vuelo nacional cerca del Día de Acción de Gracias estaba casi un 9 por ciento por debajo del nivel del año pasado. En cuanto a los vuelos cerca de la Navidad, eran aproximadamente un 18 por ciento más baratos, según la aplicación de reservaciones y rastreo de precios Hopper. Kayak, el motor de búsqueda de viajes, analizó un rango más amplio de fechas cerca de las fiestas y descubrió que los precios de los vuelos nacionales eran alrededor de un 18 por ciento más bajos por la fecha del Día de Acción de Gracias y un 23 por ciento por Navidad.“En muchos casos, observamos algunas de las tarifas más bajas desde que se reanudaron los viajes tras los recortes de 2020, en realidad”, afirmó Kyle Potter, editor ejecutivo del blog de viajes y servicio de alerta de ofertas Thrifty Traveler.El precio de los boletos para vuelos dentro de Estados Unidos bajó durante el verano, aseveró Potter, y en épocas recientes es más común encontrar ofertas para viajes internacionales, en particular a Europa.Las aerolíneas bajan sus tarifas cuando quieren tentar a más personas a reservar boletos porque la demanda es baja o la competencia es más fuerte. Sin duda, la competencia se ha intensificado en algunas rutas, pero los expertos en viajes indican que no hay certeza de que la demanda vaya en declive.Se espera que el Día de Acción de Gracias de este año establezca una cifra récord para los viajes aéreos, con predicciones de casi 30 millones de pasajeros, según Airlines for America, un grupo de la industria. Esta cifra sería un 9 por ciento más alta que la del año pasado y estaría un 6 por ciento por encima de la de 2019, antes de la pandemia.Pero algunas aerolíneas afirman que la demanda va en descenso en los periodos que no son de festividades o temporada alta. Además, algunos aeropuertos han manejado tal número de vuelos que las compañías de transporte se han visto obligadas a reducir las tarifas para llenar los aviones.Ese no había sido un problema durante la mayor parte del periodo de recuperación tras la pandemia. El clima y otras perturbaciones limitaron la oferta de vuelos el año pasado y en 2021, al igual que la escasez de pilotos capacitados, repuestos y aviones, entre otros factores. Esas condiciones provocaron un alza en el precio de los boletos, mantuvieron llenos los aviones y ayudaron a las aerolíneas a obtener excelentes ganancias.“La industria de la aviación nunca había registrado el tipo de márgenes de ganancias y rendimiento sobre capital visto en los últimos 2 años y medio”, señaló John Grant, principal analista de la empresa consultora y de datos de aviación OAG. “Casi estamos de nuevo en una industria más normal”.Para las principales aerolíneas estadounidenses continúan los buenos tiempos, impulsados en particular por una gran demanda de vuelos internacionales. Pero las compañías más pequeñas y de bajo costo han comenzado a sufrir. Varias revelaron resultados financieros decepcionantes para el trimestre concluido en septiembre. Los ejecutivos de esas aerolíneas han dicho que la demanda va en descenso, las tarifas han caído y los costos se han mantenido elevados. También señalan que el mal clima y la escasez de controladores de tráfico aéreo les han complicado la operación aérea.Por ejemplo, JetBlue Airways perdió 153 millones de dólares en el tercer trimestre, en contraste con las ganancias de 57 millones de dólares registradas en el mismo periodo el año pasado. La empresa indicó hace poco que planea cambiar algunos vuelos de mercados abarrotados, como Nueva York, a otros en los que espera un mejor desempeño, como el Caribe. Las compañías de transporte económicas Spirit Airlines y Frontier Airlines les informaron hace poco a los inversionistas que buscaban recortar decenas de millones de dólares en costos.La competencia ha sido aguerrida en algunos mercados importantes, lo que ha impulsado a la baja las tarifas y las utilidades.En Denver, donde se encuentran las oficinas generales de Frontier, este verano hubo un 14 por ciento más asientos disponibles que en el verano de 2019, según la proveedora de datos de aviación Cirium. Miami y Orlando, Florida, dos destinos populares a los que vuelan muchas empresas, experimentaron aumentos en capacidad todavía mayores.No obstante, mientras que las aerolíneas añadieron vuelos en mercados populares en busca de captar pasajeros, en aeropuertos de otras ciudades, como Los Ángeles, un centro de actividades de muchas aerolíneas importantes, se observaron reducciones considerables en la capacidad con respecto al verano de 2019.“Es evidente que existe una enorme correlación entre las aerolíneas que funcionan bien y aquellas que tienen dificultades, en términos de sus márgenes, cuando comparamos dónde están sus concentraciones”, señaló el mes pasado Barry Biffle, director ejecutivo de Frontier, durante una teleconferencia para presentar los resultados de la aerolínea correspondientes al tercer trimestre.En cuanto a las rutas internacionales, los analistas no saben con tanta certeza por qué las tarifas van a la baja ni si se mantendrán así. Gangas como las que consiguió Diorio para su viaje a París podrían ser señal de que las aerolíneas más grandes pronto enfrentarán presiones financieras o sencillamente que la industria va regresando a una normalidad prepandémica.“Por lo regular, la demanda de viajes a Europa baja durante el invierno”, explicó Steve Hafner, director ejecutivo de Kayak. “Así que me parece que eso refleja las tendencias normales”.Pero la demanda de viajes internacionales podría enfrentar obstáculos, en parte debido a las guerras de Medio Oriente y Ucrania. Los analistas también advierten que muchos consumidores quizá estén menos dispuestos a derrochar dinero en viajes o tengan menos posibilidades de hacerlo ahora que en los dos años pasados, cuando contaban con el dinero que habían ahorrado durante la pandemia. Incluso si la demanda se mantiene firme, las aerolíneas corren el riesgo de ofrecer demasiados asientos en rutas populares al extranjero.Cualquiera que sea la causa de la reciente caída de las tarifas, las ofertas son un bienvenido alivio para los viajeros después de sufrir años de precios altos, dijo Potter.“En cualquier caso, la receta para vuelos baratos está ahí”, afirmó. “Si se trata solo de un pequeño exceso de capacidad, es una victoria para los consumidores. Si la demanda de viajes está cayendo, en cierto modo es una ganancia aún mayor para las personas que nunca van a renunciar a viajar”.Niraj Chokshi escribe sobre la aviación, los ferrocarriles y otras industrias del transporte. Más de Niraj Chokshi More

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    Sharp Drop in Airfares Cheers Inflation-Weary Travelers

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    Airfares to many popular destinations have recently fallen to their lowest levels in months, and even holiday travel is far cheaper than it was last year, providing some welcome relief to consumers who have been frustrated for months by high prices for all manner of goods and services.The glut of deals suggests that the airline industry’s supercharged pandemic recovery may finally be slowing as the supply of tickets catches up and, on some routes, overtakes demand, which appears relatively robust.Consider the fares that Denise Diorio, a retired teacher in Tampa, Fla., recently scored. She spent less than $40 on flights to and from Chicago and paid just $230 for a round-trip ticket from New York to Paris and back, a trip she plans to take this month.“I’ve been telling all my friends, ‘If you want to go somewhere, get your tickets now,’” she said.The bargains she found may be exceptional, but Ms. Diorio is right that deals abound.Early this month, the average price for a domestic flight around Thanksgiving was down about 9 percent from a year ago. And flights around Christmas were about 18 percent cheaper, according to Hopper, a booking and price-tracking app. Kayak, the travel search engine, looked at a wider range of dates around the holidays and found that domestic flight prices were down about 18 percent around Thanksgiving and 23 percent around Christmas.“In a lot of cases, we’re seeing some of the lowest fares that we’ve seen really since travel started coming back after the drop-off in 2020,” said Kyle Potter, executive editor of Thrifty Traveler, a travel blog and deal-watching service.Domestic ticket prices fell over the summer, Mr. Potter said, and deals on international travel, particularly to Europe, have become more common recently.Airlines lower their fares when they are trying to get more people to book tickets as demand is slowing or they are facing stiffer competition. There’s little question that competition has intensified on some routes, but travel experts say it’s not clear whether demand is waning.Thanksgiving this year is expected to set a record for air travel, with nearly 30 million passengers forecast, according to Airlines for America, an industry group. That would be about 9 percent more than last year and 6 percent more than in 2019, before the pandemic.But some airlines say demand is slowing outside of holiday and other peak travel periods. In addition, some airports have been so flooded with flights that carriers have been forced to cut fares to fill planes.That hadn’t been much of a problem for most of the recovery from the pandemic. Weather and other disruptions limited the supply of flights last year and in 2021, as did shortages of trained pilots, parts and planes, among other factors. That drove up ticket prices, kept planes full and helped airlines take in strong profits.Thanksgiving this year is expected to set a record for air travel, with nearly 30 million passengers anticipated.Stefani Reynolds for The New York Times“The airline industry has never delivered the types of profit margins and return on capital that it has done over the last 2.5 years,” said John Grant, chief analyst with OAG, an aviation advisory and data firm. “We’re getting back to a more normal industry.”For the largest U.S. airlines, the good times have continued, fueled in particular by thriving demand for international travel. But smaller and low-fare carriers have started to suffer. Several reported disappointing financial results for the three months that ended in September. Executives at those airlines have said demand is weakening, fares are falling and costs remain high. They also say bad weather and a shortage of air traffic controllers have made flying more difficult.JetBlue Airways, for example, lost $153 million in the third quarter, compared with a $57 million profit in the same period last year. The company said recently that it was moving flights away from crowded markets, such as New York, to those where it expected stronger performance, such as the Caribbean. The budget carriers Spirit Airlines and Frontier Airlines recently told investors that they were looking to cut costs by tens of millions of dollars.Competition has been fierce in some important markets, driving down fares and profits.In Denver, where Frontier is based, about 14 percent more seats were available on flights this summer than in the summer of 2019, according to Cirium, an aviation data provider. Miami and Orlando, Fla., two popular destinations served by many budget carriers, saw even larger increases in capacity.But while airlines added flights in popular markets as they chased passengers, airports in other cities, including Los Angeles, a hub for several major airlines, had large declines in capacity from the summer of 2019.“You’ll find that there’s a large correlation between the airlines that are doing well and the ones that are struggling, margin-wise, when you compare where their concentrations are,” Barry Biffle, Frontier’s chief executive, said last month on a conference call to discuss the airline’s third-quarter results.When it comes to international routes, analysts are less certain of why fares are falling and whether they will remain low. The kinds of deals that Ms. Diorio got for her Paris trip could mean that larger airlines soon find themselves facing a financial squeeze or merely that the industry is returning to a prepandemic normal.“Historically, demand to Europe softens in the winter,” said Steve Hafner, Kayak’s chief executive. “So I think that reflects normal trends.”But demand for international travel could face challenges, partly because of the wars in the Middle East and Ukraine. Analysts also warn that many consumers may be less willing or able to splurge on travel than they were in the last couple of years, when they had pandemic savings to draw from. Even if demand remains strong, airlines risk offering too many seats on popular overseas routes.Whatever the cause of the recent drop in fares, the deals are a welcome break to travelers from years of high prices, Mr. Potter said.“Either way the recipe is there for cheap flights,” he said. “If it’s just a little bit of overcapacity, that’s a win for consumers. If travel demand is dropping, in some ways that’s an even bigger win for people who are never going to give up on travel.” More

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    U.S. Scales Back Hopes for Ambitious Climate Trade Deal With Europe

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    A negotiating deadline is quickly approaching, and the United States has lowered its expectations for a groundbreaking trade deal.For the past two years, the United States and the European Union have been working toward a deal that would encourage trade in steel and aluminum made in more environmentally friendly ways to combat climate change.But longstanding differences on the way governments should treat trade and regulation have cropped up, preventing the allies from coming to a compromise. With an Oct. 31 deadline to reach a deal approaching, the United States has significantly narrowed its ambition for the pact, at least in its initial iteration.The outcome has been deeply disappointing for American negotiators, including Katherine Tai, the United States trade representative in charge of the talks, according to people familiar with the negotiations. In speeches last year, Ms. Tai described the potential deal as “historic” and “a paradigm-shifting model” that would reduce carbon produced by heavy industries, while also limiting unfair trade competition from countries like China, which has been pumping out cheap steel that is not manufactured in an environmentally friendly way.U.S. negotiators had envisioned setting up a club of nations committed to cleaner production, initially with Europe and later with other countries, that together would act to block dirtier steel, aluminum and other products from their markets. Steel and aluminum production is incredibly carbon intensive, with the industries together accounting for about a 10th of global carbon emissions. But Europeans raised a variety of objections to the approach, including arguing that it violated global trade rules for treating countries fairly.Now, the Biden administration is trying to salvage the talks by pushing for a narrower deal in the coming weeks. The more limited U.S. proposal currently includes an immediate agreement for countries to take steps to combat a flood of dirtier steel from countries like China, as well as a commitment to keep negotiating in the coming years for a framework that would discourage trade in products made with more carbon emissions, the people familiar with the negotiations said.Katherine Tai, the U.S. trade representative, has been seeking a far-reaching deal with the Europe Union.Pete Marovich for The New York TimesThe agreement is expected to be a point of discussion at a summit planned for Oct. 20, when President Biden will meet the president of the European Commission, Ursula von der Leyen, at the White House.The stakes are high: The United States is poised to bring back Trump-era tariffs on European steel and aluminum on Jan. 1, unless the sides reach an agreement, or American negotiators issue a special reprieve. Mr. Biden paused those tariffs for two years in 2021, when negotiations began with Europe.Restoring cooperation between the United States and Europe after years of rocky relations during the Trump presidency has been a key objective for Mr. Biden and his deputies.But the talks faced a basic obstacle: the United States and Europe have fundamental differences in how they are addressing climate change, trade and competition from China, and neither side is yet willing to significantly depart from its own policies.The Biden administration has largely dispensed with traditional trade negotiations focused on opening international markets, arguing that past trade deals that lowered global barriers to trade helped multinational corporations, rather than American workers, while supercharging the Chinese economy.Instead, the Biden administration has embraced tariffs, subsidies and trade arrangements that protect industries in the United States and allied countries, while blocking cheaper products made in China. It has done so in lock step with U.S. labor unions, which are opposed to removing tariffs and other policies that protect their industries.The European Union has criticized the American tariffs and subsidy programs as protectionist policies that threaten to undermine international trade rules.“This administration is trying to significantly retool the way we go about global economic engagement,” said Emily Benson, the director of Project on Trade and Technology at the Center for Strategic and International Studies, a think tank. “What’s unclear is the degree to which our allies buy into that agenda.”For their part, European officials are putting their efforts into an ambitious new carbon pricing scheme, that would tax companies across a range of industries in Europe and elsewhere for the greenhouse gases emitted during manufacturing. European officials have urged the United States to adopt a similar approach but American officials argue such a system is not viable in the United States, where Congress would be unlikely to impose new carbon taxes on American companies.The two governments also differ in how to approach China, which makes more than half of the world’s steel, often by burning coal. American steel makers say their Chinese counterparts receive generous government subsidies that allow Chinese steel to be sold at artificially low prices, unfairly undercutting competitors.European officials have been more reluctant to target China specifically. While the E.U. government has begun to take a more skeptical look at Chinese exports, many European nations still regard the country more as a vital business partner than a geopolitical rival.Given the close alignment between the United States and Europe on many issues, the history of trade negotiations between the governments is surprisingly bleak.The Obama administration pursued a trade deal with Europe that ultimately crumbled as a result of irreconcilable differences over regulation and agriculture. After lobbing both criticism and tariffs at Europe, the Trump administration tried for a more limited agreement, with similarly unimpressive results.The Biden administration successfully de-escalated some of those trade fights. But fundamental differences remain in how the United States and Europe view the role of government and regulation.“It’s incredibly complicated, largely because we have markedly different priorities,” said William Alan Reinsch, the Scholl Chair in International Business at the Center for Strategic and International Studies. “I can see a path but the path involves both sides making concessions that they really don’t want to make.”Miriam Garcia Ferrer, a spokeswoman for the European Commission, said the countries were “fully committed to achieving an ambitious outcome” by October.Valdis Dombrovskis, the European commissioner for trade, has warm relations with the American trade representative but that has not yet resulted in an agreement.Andy Wong/Associated PressThe European Union is seeking a permanent solution to U.S. tariffs and “re-establish normal and undistorted trans-Atlantic trade” while also driving decarbonization and addressing the challenge of global steel overproduction, Ms. Garcia Ferrer said.Sam Michel, a spokesperson for the U.S. trade representative, said that the Biden administration had “been fully committed to these negotiations over the last two years and we are hopeful both sides can reach an agreement that demonstrates the close partnership between the United States and the European Union.”People close to the talks say the outcome has been particularly disappointing given the close alignment and warm relations between Mr. Biden and Ms. von der Leyen, and Ms. Tai and her counterpart, Valdis Dombrovskis, the European commissioner for trade.Ms. Tai and Mr. Dombrovskis committed earlier this year to meeting every month. Mr. Dombrovskis, the former prime minister of Latvia, hosted Ms. Tai at a seaside dinner in the Latvian capital in June, and she brought him to the White House on July 4 to watch fireworks from the lawn.U.S. officials initially thought those meetings might mark a turning point for the negotiations. In a trip to Brussels in July, Ms. Tai told her counterparts that time was running out and that they needed to get something done.But that top-level commitment did not fuel momentum at lower levels of the bureaucracy, and progress fizzled as European negotiators left for summer holidays.The pace of talks has accelerated over the past month, but for a much more limited agreement.Jennifer Harris, a former senior director for international economics at the National Security Council who played a key role in starting negotiations, expressed optimism that progress could be made in the final days and weeks of the negotiations, especially given the upcoming meeting between Mr. Biden and Ms. von der Leyen.The talks now need “the kind of swift injection of tailwind that only leaders can provide,” she said. “I don’t think either leader is going to let this thing fail.” More

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    Fragile Global Economy Faces New Crisis in Israel-Gaza War

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    A war in the Middle East could complicate efforts to contain inflation at a time when world output is “limping along.”The International Monetary Fund said on Tuesday that the pace of the global economic recovery is slowing, a warning that came as a new war in the Middle East threatened to upend a world economy already reeling from several years of overlapping crises.The eruption of fighting between Israel and Hamas over the weekend, which could sow disruption across the region, reflects how challenging it has become to shield economies from increasingly frequent and unpredictable global shocks. The conflict has cast a cloud over a gathering of top economic policymakers in Morocco for the annual meetings of the I.M.F. and the World Bank.Officials who planned to grapple with the lingering economic effects of the pandemic and Russia’s war in Ukraine now face a new crisis.“Economies are at a delicate state,” Ajay Banga, the World Bank president, said in an interview on the sidelines of the annual meetings. “Having war is really not helpful for central banks who are finally trying to find their way to a soft landing,” he said. Mr. Banga was referring to efforts by policymakers in the West to try and cool rapid inflation without triggering a recession.Mr. Banga said that so far, the impact of the Middle East attacks on the world’s economy is more limited than the war in Ukraine. That conflict initially sent oil and food prices soaring, roiling global markets given Russia’s role as a top energy producer and Ukraine’s status as a major exporter of grain and fertilizer.“But if this were to spread in any way then it becomes dangerous,” Mr. Banga added, saying such a development would result in “a crisis of unimaginable proportion.”Oil markets are already jittery. Lucrezia Reichlin, a professor at the London Business School and a former director general of research at the European Central Bank, said, “the main question is what’s going to happen to energy prices.”Ms. Reichlin is concerned that another spike in oil prices would pressure the Federal Reserve and other central banks to further push up interest rates, which she said have risen too far too fast.As far as energy prices, Ms. Reichlin said, “we have two fronts, Russia and now the Middle East.”Smoke rising from bombings of Gaza City and its northern borders by Israeli planes.Samar Abu Elouf for The New York Times Pierre-Olivier Gourinchas, the I.M.F.’s chief economist, said it’s too early to assess whether the recent jump in oil prices would be sustained. If they were, he said, research shows that a 10 percent increase in oil prices would weigh down the global economy, reducing output by 0.15 percent and increasing inflation by 0.4 percent next year. In its latest World Economic Outlook, the I.M.F. underscored the fragility of the recovery. It maintained its global growth outlook for this year at 3 percent and slightly lowered its forecast for 2024 to 2.9 percent. Although the I.M.F. upgraded its projection for output in the United States for this year, it downgraded the euro area and China while warning that distress in that nation’s real estate sector is worsening.“We see a global economy that is limping along, and it’s not quite sprinting yet,” Mr. Gourinchas said. In the medium term, “the picture is darker,” he added, citing a series of risks including the likelihood of more large natural disasters caused by climate change.Europe’s economy, in particular, is caught in the middle of growing global tensions. Since Russia invaded Ukraine in February 2022, European governments have frantically scrambled to free themselves from an over-dependence on Russian natural gas.They have largely succeeded by turning, in part, to suppliers in the Middle East.Over the weekend, the European Union swiftly expressed solidarity with Israel and condemned the surprise attack from Hamas, which controls Gaza.Some oil suppliers may take a different view. Algeria, for example, which has increased its exports of natural gas to Italy, criticized Israel for responding with airstrikes on Gaza.Even before the weekend’s events, the energy transition had taken a toll on European economies. In the 20 countries that use the euro, the Fund predicts that growth will slow to just 0.7 percent this year from 3.3 percent in 2022. Germany, Europe’s largest economy, is expected to contract by 0.5 percent.High interest rates, persistent inflation and the aftershocks of spiraling energy prices are also expected to slow growth in Britain to 0.5 percent this year from 4.1 percent in 2022.Sub-Saharan Africa is also caught in the slowdown. Growth is projected to shrink this year by 3.3 percent, although next year’s outlook is brighter, when growth is forecast to be 4 percent.Staggering debt looms over many of these nations. The average debt now amounts to 60 percent of the region’s total output — double what it was a decade ago. Higher interest rates have contributed to soaring repayment costs.This next-generation of sovereign debt crises is playing out in a world that is coming to terms with a reappraisal of global supply chains in addition to growing geopolitical rivalries. Added to the complexities are estimates that within the next decade, trillions of dollars in new financing will be needed to mitigate devastating climate change in developing countries.One of the biggest questions facing policymakers is what impact China’s sluggish economy will have on the rest of the world. The I.M.F. has lowered its growth outlook for China twice this year and said on Tuesday that consumer confidence there is “subdued” and that industrial production is weakening. It warned that countries that are part of the Asian industrial supply chain could be exposed to this loss of momentum.In an interview on her flight to the meetings, Treasury Secretary Janet L. Yellen said that she believes China has the tools to address a “complex set of economic challenges” and that she does not expect its slowdown to weigh on the U.S. economy.“I think they face significant challenges that they have to address,” Ms. Yellen said. “I haven’t seen and don’t expect a spillover onto us.” More

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    In Provence, Winemakers Confront Climate Change

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    “You can taste the climate change.”Frédéric Chaudière, a third-generation winemaker in the French village of Mormoiron, took a sip of white wine and set down his glass.The tastes of centuries-old varieties are being altered by spiking temperatures, scant rainfall, snap frosts and unpredictable bouts of extreme weather. The hellish summer was the latest reminder of how urgently the $333 billion global wine industry is being forced to adapt. Temperature records were set in Europe, the United States, China, North Africa and the Middle East as hail, drought, wildfires and floods on a biblical scale inflicted damage.Grape vines are some of the most weather-sensitive crops, and growers from Australia to Argentina have been struggling to cope. The imperative is particularly great in Europe, which is home to five of the world’s top 10 wine-producing countries and includes 45 percent of the planet’s wine-growing areas.Chêne Bleu is one of the highest vineyards in Provence, France. Winegrowers have been increasingly searching for higher altitudes for cooler temperatures. For many vineyards, new weather patterns are resulting in smaller grapes that produce sweeter wines with a higher alcohol content.A tractor driver loading grapes picked by harvesters. Chêne Bleu is one of the region’s leaders in developing adaptations for cultivation and processing that are regenerative and organic.Mr. Chaudière is the president of an association of wine producers in Ventoux. His winery, Château Pesquié, is in the Rhône Valley, where the impact of climate change over the past 50 years on winegrowers has been significant.The first burst of buds appear 15 days earlier than they did in the early 1970s, according to a recent analysis. Ripening starts 18 days earlier. And harvesting begins in late August instead of mid September. Change was expected, but the accelerating pace has come as a shock.For many vineyards, the new weather patterns are resulting in smaller grapes that produce sweeter wines with a higher alcohol content. These developments, alas, are out of step with consumers who are turning to lighter, fresher tasting wines with more tartness and less alcohol.For other vineyards, the challenges are more profound: Dwindling water supplies threaten their existence.How to respond to these shifts, though, is not necessarily clear.A harvester clipping clusters by hand and dropping them into round baskets, which are then moved into trucks.Emergency irrigation, for example, can save young vines from dying when the heat is scorching. Yet over the long haul, access to water near the surface means the roots may not drill down deep into the earth in search of the subterranean water tables they need to sustain them.Chêne Bleu, a small and relatively new family winery on La Verrière, the site of a medieval priory above the village of Crestet, is one of the region’s leaders in developing adaptations for cultivation and processing that are regenerative and organic.“We’re all going to get whacked by similar weather challenges,” said Nicole Rolet, who inaugurated the winery in 2006 with her husband, Xavier.In her view, there are two responses to climate change: You can fight it with chemicals and artificial additives that battle nature, she said, or “you can create a balanced functioning of the ecology through biodiversity.”Gardeners tending to the fruit and vegetable quarter. Scientists have found that expanding the variety of plants and animals can reduce the impact of shifting climate on crops. Between the rows, grasses blanket the ground. They help manage erosion, retain water, enrich the soil, capture more carbon and control pests and disease.There is a bee colony on the property to increase cross-pollination. The natural approach was on display one morning as harvesters slowly inched down the rows of vines, clipping plump purple clusters of Grenache grapes by hand.Stationary wooden pickets have been replaced by a trellising system that can be adjusted upward as vines grow so that their leaves can be positioned to serve as a natural canopy to shade grapes from a burning sun.Between the rows, grasses blanket the ground. They are just some of the cover crops that have been planted to help manage erosion, retain water, enrich the soil, capture more carbon and control pests and disease.Scientists have found that expanding the variety of plants and animals can reduce the impact of shifting climate on crops, highlighting, as one study put it, “the critical role that human decisions play in building agricultural systems resilient to climate change.”Surrounding Chêne Bleu’s emerald fields are wildflowers, a wide range of plant species and a private forest. There is a bee colony to increase cross-pollination and a grove of bamboo to naturally filter water used in the winery.Sheep provide the manure for fertilizer. The vineyard also dug a muddy pool — nicknamed the “spa” — for roaming wild boar, to lure them away from the juicy grapes with their own water supply.The Rolets have teamed up with university researchers to experiment with cultivation practices. And they are compiling a census of animal and plant species, including installing infrared equipment to capture rare creatures like a genet, a catlike animal with a long, ringed tail.“People are formally and informally doing experimental work, promoting best practices,” Ms. Rolet said, as she sat in a grand dining hall topped by stone archways at the restored priory. “It’s surprisingly hard to do.”“No one has time or money to take nose off the grindstone to look at what someone is doing on the other side of the world,” she explained.Harvesters sifting through grapes on a conveyor belt in the winery, looking to pick out stray leaves or bad grapes.At the winery, the morning’s harvest is emptied onto a conveyor belt, where workers pick out stray leaves or damaged berries before they are dropped into a gentle balloon press. The golden juice drips down into a tray lined with dry ice, producing vaporous swirls and tendrils. The ice prevents bacterial growth and eats up the oxygen that can ruin the flavor.Chêne Bleu has several advantages that many neighboring vineyards don’t. Its 75 acres are relatively isolated and located in a Unsesco biosphere reserve, a designation aimed at conserving biodiversity and promoting sustainable practices. Because it is situated on a limestone outcropping on the ridge of a tectonic plate, the soil contains ancient seabeds and a rich combination of minerals. And, at 1,600 feet, it is one of the highest vineyards in Provence.Winegrowers have been increasingly searching for higher altitudes because of cooler nighttime temperatures and shorter periods of intense heat. In Spain’s Catalonia region, the global wine producer Familia Torres has in recent years planted vineyards at 3,000 to 4,000 feet up.An assistant winemaker. A cellar assistant cleaning equipment.The wine cellar with barrels made of French oaks.Chêne Bleu has other resources. Mr. Rolet, a successful businessman and former chief executive of the London Stock Exchange, has been able to finance the vineyard’s cutting edge equipment and experiments. A larger marketing budget enables the vineyard to take chances others might not want to risk.The Rolets, for example, chose to sometimes bypass traditional appellations — legally defined and protected wine-growing areas — to experiment with more varieties for their high-end offerings.Although the wine map has changed, France’s strict classification system has not. Appellations were instituted decades ago to ensure that buyers knew what they were purchasing. But now, those definitions can limit the type of varieties that farmers can use as they search for vines that can better withstand climate change.Dry ice being added to the press pan to help protect the juice from oxygen. The juice drips down into a tray lined with dry ice, which prevents bacterial growth and eats up the oxygen that can ruin the flavor.“There is a big, frustrating lag time between what the winemakers are experiencing and what the authorities are doing,” said Julien Fauque, the director of Cave de Lumières, a cooperative of roughly 50 winegrowers who farm 450 hectares of land in the Ventoux and Luberon areas.Climate change may mean that growers must reconsider once unthinkable practices.Adding tiny amounts of water could reduce the alcoholic content and prevent fermentation from stalling, he said, but the practice, strictly forbidden across the European Union, could land a winemaker in prison. California, by contrast, allows such additions.There is flexibility in the system, said Anthony Taylor, the director of communications at Gabriel Meffre in Gigondas, one of the larger wineries in southern Rhône. But “they’re on a wire,” he said of official regulators. “They want to preserve as much as possible a profile that is successful, and they’re also listening to the other side, which argues we need to change things or introduce new varieties.”The pace of change, though, is accelerating, Mr. Taylor said: “The speed at which we’re moving is quite frightening.”A chef uses only local products, mainly from the vegetable garden on the estate.Harvesters taking a lunch break before returning to work.Chêne Bleu is on La Verrière, the site of a medieval priory. More

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    Europe Rushes to Build Defenses But With Little Consensus on How

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    At Saab’s sprawling combat production center in Karlskoga, Sweden, the 84-millimeter shells that can take out a battle tank in a single stroke are carefully assembled by hand. One worker stacked tagliatelle-shaped strips of explosive propellant in a tray. Another attached the translucent sheafs around the rotating fins of a guiding system.Outside the squat building, one of hundreds in the guarded industrial park, construction is underway on another factory. Capacity at this plant — a few minutes’ drive from the home of Alfred Nobel, the inventor of dynamite and founder of the peace prize — is scheduled to more than double in the next two years.The enlargement is part of a titanic expansion in military spending that every country in Europe has undertaken since Russia invaded Ukraine 18 months ago. Yet the mad dash by more than 30 allied countries to stockpile arms after years of minimal spending has raised concerns that the massive buildup will be disjointed, resulting in waste, supply shortages, unnecessary delays and duplication.“Europeans have not addressed the deeply fragmented and disorganized manner in which they generate their forces,” a recent report from the Center for Strategic and International Studies said. “Investing more in an uncoordinated manner will only marginally improve a dysfunctional status quo.”The North Atlantic Treaty Organization, which sets overall defense strategy, and the European Union have pushed for greater cooperation and integration, creating several new initiatives, including one to coordinate weapons procurement.Manufacturing shells at a Saab facility in Karlskoga, Sweden.Loulou d’Aki for The New York TimesAnother step in the production at the Karlskoga facility.Loulou d’Aki for The New York TimesCleaning the main charges on the production line.Loulou d’Aki for The New York TimesStill, a growing chorus of weapons manufacturers, political figures and military experts warn the efforts fall far short of what is needed. “There needs to be some clarity since we’re not the United States of Europe,” Micael Johansson, the president and chief executive of Saab, explained from the company’s headquarters in Stockholm. “Every country decides themselves what type of capabilities they need.”Each country has its own strategic culture, procurement practices, specifications, approval processes, training and priorities.Alliance members may sometimes use the same aircraft but with different encryption systems and varying instruments. As Ukrainian soldiers have discovered, 155-millimeter shells produced by one manufacturer do not necessarily fit into a howitzer made by another. Ammunition and parts are not always interchangeable, complicating maintenance and causing more frequent breakdowns.The European Union does not “have a defense planning process,” said Mr. Johansson. This summer, he was appointed vice chairman of the board at the Aerospace and Defense Industries Association of Europe, a trade association representing 3,000 companies. “NATO has to rethink how do we create resilience in the whole system,” including supply chains that produce the munitions soldiers use on the battlefield.Saab’s president and chief executive, Micael Johansson, at the company’s headquarters in Stockholm.Loulou d’Aki for The New York TimesCrucial raw materials like titanium and lithium, as well as sophisticated electronics and semiconductors, are in great demand.And there is a shortage of explosives, particularly powder, which manufacturers across the entire weapons industry depend on. But there has been little detailed discussion about which systems should get priority or how the supply of powder as a whole could be increased.“I suggested it,” Mr. Johansson said, “but it hasn’t happened yet.”The discussions are taking place at a time when the resilience of far-flung supply chains of all kinds are being re-examined. Memories are still fresh of interruptions in the flow of natural gas and grain resulting from the war in Ukraine, not to mention the severe backlogs in the production and delivery of goods and materials caused by the Covid pandemic.The big trend now, said Michael Hoglund, head of business area ground combat at Saab, is to bring supply chains closer to home and to create reliable backups. “We’re no longer buying the cheapest,” he said. “We’re paying a fee to feel safer.”Workers on the production line.Loulou d’Aki for The New York TimesAssembling a weapon.Loulou d’Aki for The New York TimesCoordinating supplies is just one element. Getting a jumble of varying weapons systems, practices and technologies to smoothly perform in concert has always been a challenge. NATO has set standards so that the different systems are compatible — what is known as interoperability.The practice, though, can be less than harmonious.The European Defense Agency’s annual review last year found that only 18 percent of defense investments are done together, half of the targeted amount. “The degree of cooperation among our armies is very low,” Josep Borrell, the European Union’s top diplomat, said at the time.Sweden is on the cusp of joining NATO, but it has partnered with the military alliance before, and Saab, which produces a range of weapons systems including the Gripen fighter jet, sells to scores of countries around the world.Managers there have seen some of the challenges to coordination up close in large and small ways.A Gripen aircraft at the Saab test center in Linkoping.Loulou d’Aki for The New York TimesJakob Hogberg, a Gripen test pilot, discussing the aircraft.Loulou d’Aki for The New York Times“The whole system in each army is built up in a special way,” said Gorgen Johansson, who oversees the Karlskoga operation. (He is not related to the chief executive.) Behind him sat an empty green tube used to launch Saab’s shoulder-fired NLAW anti-tank missile. It was signed by Ukraine’s former minister of defense and returned to its maker as a token of appreciation.Some customers, he said, want two launchers packed in a single box, another wants four, or six, because they have bought vehicles and equipment that can hold different numbers of launchers.Mr. Johansson said that until very recently, it was impossible to get the players to even talk about standardizing where labels were positioned or what color they should be.Bigger problems remain. After the Cold War ended, there was an enormous consolidation of defense companies as military spending shrank. Still, like varying brands of cereal, there is a wide range of each major weapons system. Europe has 27 different types of howitzers, 20 types of fighter jets and 26 types of destroyers and frigates, according to an analysis by McKinsey & Company.In building a unified fighting force, Europe must balance competition, which can result in improvements and innovation, with the need to eliminate waste and streamline operations, by ordering or even designing weapons in concert.Underlying the once-in-a-generation military expansion is that the continent is still primarily dependent on the United States for its safety. President Trump’s complaints in 2018 of insufficient spending in Europe and veiled threats to withdraw from NATO profoundly shook the region.A staff member collecting equipment from a tank used as a target at a test center.Loulou d’Aki for The New York TimesHolding up shrapnel that hit the target after a firing exercise.Loulou d’Aki for The New York TimesBut the view that Europe has to take more financial responsibility for its own defense is now widespread, urgently ratcheting up the pressure to better unify Europe’s defenses.Coordination, though, faces several built-in hurdles. As the center’s report concluded, integrating European defense “will be a slow laborious process and a generational effort.”Governments are already funneling millions or billions of dollars to defense and, naturally, every one wants to support its own industries and workers.And whatever Europe’s overall defense needs may be, each nation’s first priority is protecting their borders. There is limited trust even among alliance members.“We think we are friends,” said Gorgen Johansson in Karlskoga. But he noted that during the pandemic when there was a shortage of ventilators, Germany, which had a surplus, stopped supplying them to Sweden, Italy and other countries in need.“The talks have started,” Mr. Johansson said of efforts to improve coordination. “Do I think it will go quickly? No.”Working on a plane at Saab’s fighter production facility in Linköping.Loulou d’Aki for The New York TimesWorkers assembling an aircraft in Linköping.Loulou d’Aki for The New York Times More

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    America’s Foreign Vacations Tell Us Something About the U.S. Economy

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    Prices are high, but Americans are opening their wallets for international flights and hotels. It’s the latest evidence of consumer resilience.Forget Emily. These days, a whole flood of Americans are in Paris.People spent 2020 and 2021 either cooped up at home or traveling sparingly and mostly within the continental U.S. But after Covid travel restrictions were lifted for international trips last summer, Americans are again headed overseas.While domestic leisure travel shows signs of calming — people are still vacationing in big numbers, but prices for hotels and flights are moderating as demand proves strong but not insatiable — foreign trips are snapping back with a vengeance. Americans are boarding planes and cruise ships to flock to Europe in particular, based on early data.According to estimates from AAA, international travel bookings for 2023 were up 40 percent from 2022 through May. That is still down about 2 percent from 2019, but it’s a hefty surge at a time when some travelers are being held back by long passport processing delays amid record-high applications. Tour and cruise bookings are expected to eclipse prepandemic highs, with especially strong demand for vacations to major European cities.Paris, for example, experienced a huge jump in North American tourists last year compared with 2021, according to the city’s tourism bureau. Planned air arrivals for July and August of this year climbed by another 14.4 percent — to nearly 5 percent above the 2019 level.“This year is just completely crazy,” said Steeve Calvo, a Parisian tour guide and sommelier whose company — The Americans in Paris — has been churning out visits to Normandy and French wine regions. He attributes some of the jump to a rebound from the pandemic and some to television shows and social media.“‘Emily in Paris’: I never saw so many people in Paris with red berets,” he said, noting that the signature chapeau of the popular Netflix show’s heroine started to pop up on tourists last year. Other newcomers are eager to take coveted photos for their Instagram pages.“In Versailles, the Hall of Mirrors, I call it the Hall of Selfie,” Mr. Calvo said, referring to a famous room in the palace.Robust travel booking numbers and anecdotes from tour guides align with what companies say they are experiencing: From airlines to American Express, corporate executives are reporting a lasting demand for flights and vacations.“The constructive industry backdrop is unlike anything that any of us have ever seen,” Ed Bastian, the chief executive officer at Delta Air Lines, said during a June 27 investor day. “Travel is going gangbusters, but it’s going to continue to go gangbusters because we still have an enormous amount of demand waiting.”Transportation Security Administration data shows that the daily average number of passengers who passed through U.S. airport checkpoints in June 2023 was 2.6 million, 0.5 percent above the June 2019 level, based on an analysis by Omair Sharif at Inflation Insights.And in many foreign airports, the burst of American vacationers is palpable: Customs lines are packed with U.S. tourists, from Paris’s Charles de Gaulle to London’s Heathrow. The latter saw 8 percent more traffic from North America in June 2023 than in June 2019, based on airport data.“This year is just completely crazy,” said Steeve Calvo, a tour guide in Paris.Jessica Chou for The New York Times In a weird way, the rebound in foreign travel may be taking some pressure off U.S. inflation.International flight prices, while surging for some routes, are not a big part of the U.S. Consumer Price Index, which is dominated by domestic flight prices. In fact, airfares in the inflation measure dropped sharply in June from the previous month and are down nearly 19 percent from a year ago.That is partly because fuel is cheaper and partly because airlines are getting more planes into the sky. Many pilots and air traffic controllers had been laid off or had retired, so companies struggled to keep up when demand started to recover after the initial pandemic slump, pushing prices sharply higher in 2022.“We just didn’t have enough seats to go around last year,” Mr. Sharif said, explaining that while personnel issues persist, so far this year the supply situation has been better. “Planes are still totally packed, but there are more planes.”And as people flock abroad, it is sapping some demand from hotels and tourist attractions in the United States. International tourists have yet to return to the United States in full force, so they are not entirely offsetting the wave of Americans headed overseas.Domestic travel is hardly in a free fall — July 4 weekend travel probably set new records, per AAA — but tourists are no longer so insatiable that hotels can keep raising room rates indefinitely. Prices for lodging away from home in the U.S. climbed by 4.5 percent in the year through June, which is far slower than the 25 percent annual increases hotel rooms were posting last spring. There is even elbow room at Disney World.Even if it isn’t inflationary, the jump in foreign travel does highlight something about the U.S. economy: It’s hard to keep U.S. consumers down, especially affluent ones.The Fed has been raising interest rates to cool growth since early 2022. Officials have made it more expensive to borrow money in hopes of creating a ripple effect that would cut into demand and force companies to stop lifting prices so much.Consumption has slowed amid that onslaught, but it hasn’t tanked. Fed officials have taken note, remarking at their last meeting that consumption had been “stronger than expected,” minutes showed.The resilience comes as many households remain in solid financial shape. People who travel internationally skew wealthier, and many are benefiting from a rising stock market and still-high home prices that are beginning to prove surprisingly immune to interest rate moves.Those who do not have big stock or real estate holdings are experiencing a strong job market, and some are still holding onto extra savings built up during the pandemic. And it is not just vacation destinations feeling the momentum: Consumers are still spending on a range of other services.“There’s this last blowoff of spending,” said Kathy Bostjancic, chief economist for the insurance company Nationwide Mutual.It could be that consumer resilience will help the U.S. economy avoid a recession as the Fed fights inflation. As has been the case at American hotels, demand that stabilizes without plummeting could allow for a slow and steady moderation of price increases.But if consumers remain so ravenous that companies find they can still charge more, it could prolong inflation. That’s why the Fed is keeping a close eye on spending.Ms. Bostjancic thinks consumers will pull back starting this fall. They are drawing down their savings, the labor market is cooling, and it may simply take time for the Fed’s rate increases to have their full effect. But when it comes to many types of travel, there is no end in sight yet.“Despite economic headwinds, we’re seeing very strong demand for summer leisure travel,” said Mike Daher, who leads the U.S. Transportation, Hospitality & Services practice at the consulting firm Deloitte.Mr. Daher attributes that to three driving forces. People missed trips. Social media is luring many to new places. And the advent of remote work is allowing professionals — “what we call the laptop luggers,” per Mr. Daher — to stretch out vacations by working a few days from the beach or the mountains. Mr. Calvo, the tour guide, is riding the wave, taking Americans on tours that showcase Paris’s shared history with France and driving them in minivan tours to Champagne. “I have no clue if it’s going to last,” he said. More