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    Why Are Oil Prices So High and Will They Stay That Way?

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    HOUSTON — Oil prices are increasing, again, casting a shadow over the economy, driving up inflation and eroding consumer confidence.Crude prices rose more than 15 percent in January alone, with the global benchmark price crossing $90 a barrel for the first time in more than seven years, as fears of a Russian invasion of Ukraine grew.Though the summer driving season is still months away, the average price for regular gasoline is fast approaching $3.40 a gallon, roughly a dollar higher than it was a year ago, according to AAA.The Biden administration said in November that it would release 50 million barrels of oil from the nation’s strategic reserves to relieve the pressure on consumers, but the move hasn’t made much of a difference.Many energy analysts predict that oil could soon touch $100 a barrel, even as electric cars become more popular and the coronavirus pandemic persists. Exxon Mobil and other oil companies that only a year ago were considered endangered dinosaurs by some Wall Street analysts are thriving, raking in their biggest profits in years.Why are oil prices suddenly so high?The pandemic depressed energy prices in 2020, even sending the U.S. benchmark oil price below zero for the first time ever. But prices have snapped back faster and more than many analysts had expected in large part because supply has not kept up with demand.Oil prices are at their highest point since 2014.Price of a barrel of Brent crude, the global benchmark, and West Texas Intermediate, the U.S. standard

    Source: FactSetBy The New York TimesWestern oil companies, partly under pressure from investors and environmental activists, are drilling fewer wells than they did before the pandemic to restrain the increase in supply. Industry executives say they are trying not to make the same mistake they made in the past when they pumped too much oil when prices were high, leading to a collapse in prices.Elsewhere, in countries like Ecuador, Kazakhstan and Libya, natural disasters and political turbulence have curbed output in recent months.Understand Russia’s Relationship With the WestThe tension between the regions is growing and Russian President Vladimir Putin is increasingly willing to take geopolitical risks and assert his demands.Competing for Influence: For months, the threat of confrontation has been growing in a stretch of Europe from the Baltic Sea to the Black Sea. Threat of Invasion: As the Russian military builds its presence near Ukraine, Western nations are seeking to avert a worsening of the situation.Energy Politics: Europe is a huge customer of Russia’s fossil fuels. The rising tensions in Ukraine are driving fears of a midwinter cutoff.Migrant Crisis: As people gathered on the eastern border of the European Union, Russia’s uneasy alliance with Belarus triggered additional friction.Militarizing Society: With a “youth army” and initiatives promoting patriotism, the Russian government is pushing the idea that a fight might be coming.“Unplanned outages have flipped what was thought to be a pivot towards surplus into a deep production gap,” said Louise Dickson, an oil markets analyst at Rystad Energy, a research and consulting firm.On the demand side, much of the world is learning to cope with the pandemic and people are eager to shop and make other trips. Wary of coming in contact with an infectious virus, many are choosing to drive rather than taking public transportation.But the most immediate and critical factor is geopolitical.A potential Russian invasion of Ukraine has “the oil market on edge,” said Ben Cahill, a senior fellow at the Center for Strategic and International Studies in Washington. “In a tight market, any significant disruptions could send prices well above $100 per barrel,” Mr. Cahill wrote in a report this week.Russia produces 10 million barrels of oil a day, or roughly one of every 10 barrels used around the world on any given day. Americans would not be directly hurt in a significant way if Russian exports stopped, because the country sends only about 700,000 barrels a day to the United States. That relatively modest amount could easily be replaced with oil from Canada and other countries.A Russian invasion of Ukraine could interrupt oil and gas shipments, which would increase prices further.Brendan Hoffman for The New York TimesBut any interruption of Russian shipments that transit through Ukraine, or the sabotage of other pipelines in northern Europe, would cripple much of the continent and distort the global energy supply chain. That’s because, traders say, the rest of the world does not have the spare capacity to replace Russian oil.Even if Russian oil shipments are not interrupted, the United States and its allies could impose sanctions or export controls on Russian companies, limiting their access to equipment, which could gradually reduce production in that country.In addition, interruptions of Russian natural gas exports to Europe could force some utilities to produce more electricity by burning oil rather than gas. That would raise demand and prices worldwide.What can the United States and its allies do if Russian production is disrupted?The United States, Japan, European countries and even China could release more crude from their strategic reserves. Such moves could help, especially if a crisis is short-lived. But the reserves would not be nearly enough if Russian oil supplies were interrupted for months or years.Western oil companies that have pledged not to produce too much oil would most likely change their approach if Russia was unable or unwilling to supply as much oil as it did. They would have big financial incentives — from a surging oil price — to drill more wells. That said, it would take those businesses months to ramp up production.What is OPEC doing?President Biden has been urging the Organization of the Petroleum Exporting Countries to pump more oil, but several members have been falling short of their monthly production quotas, and some may not have the capacity to quickly increase output. OPEC members and their allies, Russia among them, are meeting on Wednesday, and will probably agree to continue gradually increasing production.In addition, if Russian supplies are suddenly reduced, Washington will most likely put pressure on Saudi Arabia to raise production independently of the cartel. Analysts think that the kingdom has several million barrels of spare capacity that it could tap in a crisis.What impact would higher oil prices have on the U.S. economy?A big jump in oil prices would push gasoline prices even higher, and that would hurt consumers. Working-class and rural Americans would be hurt the most because they tend to drive more. They also drive older, less fuel-efficient vehicles. And energy costs tend to represent a larger percentage of their incomes, so price increases hit them harder than more affluent people or city dwellers who have access to trains and buses.Rising oil and gas prices would pinch consumers, especially the less affluent and rural residents.Jim Lo Scalzo/EPA, via ShutterstockBut the direct economic impact on the nation would be more modest than in previous decades because the United States produces more and imports less oil since drilling in shale fields exploded around 2010 because of hydraulic fracturing. The United States is now a net exporter of fossil fuels, and the economies of several states, particularly Texas and Louisiana, could benefit from higher prices.What would it take for oil prices to fall?Oil prices go up and down in cycles, and there are several reasons prices could fall in the next few months. The pandemic is far from over, and China has shut down several cities to stop the spread of the virus, slowing its economy and demand for energy. Russia and the West could reach an agreement — formal or tacit — that forestalls a full-scale invasion of Ukraine.And the United States and its allies could restore a 2015 nuclear agreement with Iran that former President Donald J. Trump abandoned. Such a deal would allow Iran to sell oil much more easily than now. Analysts think the country could export a million or more barrels daily if the nuclear deal is revived.Ultimately, high prices could depress demand for oil enough that prices begin to come down. One of the main financial incentives for buying electric cars, for example, is that electricity tends to be cheaper per mile than gasoline. Sales of electric cars are growing fast in Europe and China and increasingly also in the United States. More

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    Omicron Is an Economic Threat, but Inflation Is Worse, Central Bankers Say

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    Within 24 hours, the Federal Reserve, Bank of England and European Central Bank all stepped forward to deal with price increases.There is still a lot scientists do not know about Omicron. There is cautious optimism — but no certainty — about the effectiveness of vaccines against this fast-spreading variant of the coronavirus, and experts do not fully understand what it means for public health or the economy.But central banks have concluded they don’t have the luxury of waiting to find out.Facing surging inflation, three of the world’s most influential central banks — the Federal Reserve, Bank of England and European Central Bank — took decisive steps within 24 hours of each other to look past Omicron’s economic uncertainty. On Thursday, Britain’s central bank unexpectedly raised interest rates for the first time in more than three years as a way to curb inflation that has reached a 10-year high. The eurozone’s central bank confirmed it would stop purchases under a bond-buying program in March. The day before, the Fed projected three interest rate increases next year and said it would accelerate the wind down its own bond-buying program.The perception that the Bank of England would “view the outbreak of the Omicron variant with greater concern than it actually did” caused the surprise in financial markets, ” Philip Shaw, an economist at Investec in London, wrote in a note to clients. The Fed also “carried on regardless” with its tightening plans, he added.Aside from Omicron, the central banks were running out of reasons to continue emergency levels of monetary stimulus designed to keep money flowing through financial markets and to keep lending to businesses and households robust throughout the pandemic. The drastic measures of the past two years had done the job — and then some: Inflation is at a nearly 40-year high in the United States; in the eurozone it is the highest since records began in 1997; and price rises in Britain have consistently exceeded expectations.It is still unknown how Omicron will affect the economic recovery. Vaccine makers are still testing their shots against the variant.Alessandro Grassani for The New York TimesThe heads of all three central banks have separately decided that the price gains won’t be as temporary as they once thought, as supply chains take a while to untangle and energy prices pick up again.Andrew Bailey, the governor of the Bank of England, said that policymakers in Britain were seeing things that could threaten inflation in the medium-term. “So that’s why we have to act,” he said on Thursday.“We don’t know, of course, a lot about Omicron at the moment,” he added. It could slow the economy, and already there are canceled holiday parties, fewer restaurant bookings, less retail foot traffic and signs that more people are staying home. But Omicron could also worsen inflationary pressures, he said. “And that’s, I’m afraid, a very important factor for us.”Already, price gains have popped higher this year as snarled supply chains and goods shortages have raised shipping and manufacturing costs. Depending on the severity of Omicron and how governments react, the variant could cause factories to shut down and could keep supply chains in disarray and workers at home, prolonging goods and labor shortages and pushing inflation higher.At the same time, policymakers are assuming the impact on the economy will be milder than previous waves of the virus. With each surge in cases and reintroduction of restrictions, the dent to the economy has gotten smaller and smaller. This would lessen the risk that the central banks end up tightening monetary policy into a downturn.Still, it is an awkward balancing act. On the same day the Bank of England raised rates, its staff cut half a percentage point from their growth forecasts for the final three months of the year. By the end of 2021, the British economy will still be 1.5 percent smaller than its prepandemic size, the bank estimated.Christine Lagarde, the president of the European Central Bank, said Omicron had created uncertainty in the face of a strong recovery.Pool photo by Ronald Wittek“From a macroeconomic perspective, it’s unlikely that the fourth wave is going to have as meaningful an impact as we’ve seen even during last winter,” said Dean Turner, an economist at UBS Global Wealth Management.The economic recoveries from the pandemic, though bumpy, haven’t been derailed yet. Unemployment rates are falling in Europe and the United States, and businesses are complaining that is difficult to hire staff. That, combined with the burst of inflation, was enough to bolster the case for some monetary tightening.“There’s a lot of uncertainty with the new variant, and it’s not clear how big the effects would be on either inflation or growth or hiring,” Jerome H. Powell, the Fed chair, said on Wednesday. But there is a “real risk” inflation could be more persistent, he also said, which was part of the reason the bank sped up its plans to taper its bond purchases.Ending the Fed’s bond purchases sooner would give the central bank room to react to a wider range of economic outcomes next year, Mr. Powell said.“The data is pretty glaring,” Mr. Turner of UBS said of recent statistics on inflation and employment. “There’s only so much caution you can get away with,” before central banks need to take action, he said.Omicron has created uncertainty in the face of a strong recovery, Christine Lagarde, the president of the European Central Bank said on Thursday after she outlined how the bank would end its largest pandemic-era stimulus measure.Vaccine-makers are still testing their shots against Omicron and medical officials are encouraging restraint when it comes to socializing rather than implementing new lockdowns, but central bankers are marching ahead because time isn’t on their side. The effect of monetary policy decisions on the wider economy isn’t immediate.The Bank of England is forecasting that inflation will peak at 6 percent in April, three times the central bank’s target. Within such a short time frame, there is little policymakers can do to stop that from happening, but they can try to signal to businesses and unions setting wages that they will act to stop higher inflation from becoming entrenched, said Paul Mortimer-Lee, the deputy director of the National Institute of Economic and Social Research in London. This may prevent higher prices from spilling over into significantly higher wages, which could cause businesses to raise prices even more.While all three central banks are facing similar problems with high inflation and are keeping watch over wage negotiations, their future challenges are different.The Federal Reserve and Bank of England are worried about the persistence of high inflation. For the European Central Bank, inflation in the medium term is too low, not too high. It is still forecasting inflation to be below its 2 percent target in 2023 and 2024. To help reach that target in coming years, the central bank will increase the size of an older bond-buying program beginning in April, after purchases end in the larger, pandemic-era program. This is to avoid “a brutal transition,” Ms. Lagarde said.She warned against drawing strong comparisons between Britain, the United States and the eurozone economies.“Those three economies are at a completely different states of the cycle,” she said. “We are in a different universe and environment,” even though there might be some spillover effects across countries from the actions each central bank takes.Melissa Eddy More

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    Workers in Europe Are Demanding Higher Pay as Inflation Soars

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    Prices are rising at the fastest rate on record, and unions want to keep up. Policymakers worry that might make inflation worse.PARIS — The European Central Bank’s top task is to keep inflation at bay. But as the cost of everything from gas to food has soared to record highs, the bank’s employees are joining workers across Europe in demanding something rarely seen in recent years: a hefty wage increase.“It seems like a paradox, but the E.C.B. isn’t protecting its own staff against inflation,” said Carlos Bowles, an economist at the central bank and vice president of IPSO, an employee trade union. Workers are pressing for a raise of at least 5 percent to keep up with a historic inflationary surge set off by the end of pandemic lockdowns. The bank says it won’t budge from a planned a 1.3 percent increase.That simply won’t offset inflation’s pain, said Mr. Bowles, whose union represents 20 percent of the bank’s employees. “Workers shouldn’t have to take a hit when prices rise so much,” he said.Inflation, relatively quiet for nearly a decade in Europe, has suddenly flared in labor contract talks as a run-up in prices that started in spring courses through the economy and everyday life.From Spain to Sweden, workers and organized labor are increasingly demanding wages that keep up with inflation, which last month reached 4.90 percent, a record high for the eurozone. Austrian metalworkers wrested a 3.6 percent pay raise for 2022. Irish employers said they expect to have to lift wages by at least 3 percent next year. Workers at Tesco supermarkets in Britain won a 5.5 percent raise after threatening to strike around Christmas. And in Germany, where the European Central Bank has its headquarters, the new government raised the minimum wage by a whopping 25 percent, to 12 euros (about $13.60) an hour.A market in Frankfurt. Inflation in the eurozone last month reached 4.90 percent, a record high.Felix Schmitt for The New York TimesThe upturns follow a bout of anemic wage growth in Europe. Hourly wages fell for the first time in 10 years in the second quarter from the same period a year earlier, although economists say pandemic shutdowns and job furloughs make it hard to paint an accurate picture. In the decade before the pandemic, when inflation was low, wages in the euro area grew by an average of 1.9 percent a year, according to Eurostat.The increases are likely to be debated this week at meetings of the European Central Bank and the Bank of England. E.C.B. policymakers have insisted for months that the spike in inflation is temporary, touched off by the reopening of the global economy, labor shortages in some industries and supply-chain bottlenecks that can’t last forever. Energy prices, which jumped in November a staggering 27.4 percent from a year ago, are also expected to cool.The E.C.B., which aims to keep annual inflation at 2 percent, has refrained from raising interest rates to slow climbing prices, arguing that by the time such a policy takes effect, inflation would have eased anyway on its own.“We expect that this rise in inflation will not last,” Christine Lagarde, the E.C.B. president, said in an interview in November with the German daily F.A.Z., adding that it was likely to start fading as soon as January.In the United States, where the government on Friday reported that inflation jumped 6.8 percent in the year through November, the fastest pace in nearly 40 years, officials are not so sure. In congressional testimony last week, the Federal Reserve chair, Jerome H. Powell, stopped using the word “transitory” to describe how long high inflation would last. The Omicron variant of the coronavirus could worsen supply bottlenecks and push up inflation, he said.In Europe, unions are also agitated after numerous companies reported bumper profits and dividends despite the pandemic. Companies listed on France’s CAC 40 stock index saw margins jump by an average of 35 percent in the first quarter of 2021, and half reported profits around 40 percent higher than the same period a year earlier.Justine Negoce, a cashier at Leroy Merlin, with her daughters. She joined a companywide walkout in Paris last month demanding a pay increase.Andrea Mantovani for The New York TimesWorkers say that they have not benefited from such gains, and that inflation has made things worse by abruptly slashing their purchasing power. Companies, for their part, are wary of linking salaries to inflation — a policy that also makes the European Central Bank nervous.Surging energy costs have been “a shock on incomes,” said James Watson, chief economist for Business Europe, the largest business trade association. “But if you try to compensate by raising wages, there’s a risk that it’s unsustainable and that we enter into a wage-price spiral,” he said.European policymakers are watching carefully for any signs that companies are passing the cost of higher wages on to consumers. If that happens, it could create a dangerous run-up of higher prices that might make inflation chronic.For now, that seems unlikely, in part because wage negotiations so far haven’t resulted in outsize pay increases, said Holger Schmieding, chief economist at Berenberg Bank in London.Negotiated wage increases have been averaging around 2.5 percent, below inflation’s current pace. “Will wage hikes be inflationary? Not really,” he said. “The eurozone is not at a severe risk.”But as climbing prices continue to unnerve consumers, labor organizations are unlikely to ease up. Gasoline prices recently hit €2 a liter in parts of Europe — equal to over $8 a gallon. Higher transportation costs and supply chain bottlenecks are also making supermarket basics more expensive.Ms. Negoce is facing a 25 percent jump in grocery and gas bills for her family. Even with a pay raise next year, “we’ll need to count every penny,” she said.Andrea Mantovani for The New York TimesJustine Negoce, a cashier at France’s largest home-improvement chain, joined an unprecedented companywide walkout in Paris last month to demand a hefty raise as rising prices gobbled up her modest paycheck.After employees blocked warehouses for 10 days and demonstrated in the cold, the company, Leroy Merlin, agreed to a 4 percent raise for its 23,000 workers in France — twice the amount that management originally offered. The company, owned by Adeo, Europe’s biggest DIY chain, saw revenue climb over 5 percent in 2020 to €8 billion as housebound consumers decorated their homes and people like Ms. Negoce worked the front lines to ring up sales.Her monthly take-home pay will rise in January to €1,300 from €1,250. The additional cash will help offset a 25 percent jump in grocery and gas bills for her two teenage children and husband — just barely.On a recent trip to the supermarket, her basket of food basics, including rice, coffee, sugar and pasta, jumped to €103 instead of the €70 to €80 she paid a few months back. Filling her gas tank now costs €75 instead of €60. And even with her husband’s modest salary, she said, the couple will still be in the red at the end of the month.“We’re happy with the raise, because every little bit helps,” Ms. Negoce said. “But things are still tight, and we’ll need to count every penny.”In a statement, Leroy Merlin said the agreement maintains employees’ purchasing power and puts its average salaries for next year at 15 percent above France’s gross monthly minimum wage, which the government raised in October by 2.2 percent.Crucially, executives also agreed to return to the bargaining table in April if a continued upward climb in prices hurts employees.At Sephora, the luxury cosmetics chain owned by LVMH Moët Hennessy Louis Vuitton, some unions are seeking an approximately 10 percent pay increase of €180 a month to make up for what they say is stagnant or low pay for employees in France, many of whom earn minimum wage or a couple hundred euros a month more.Jenny Urbina, a representative of the union that is negotiating with Sephora for salary increases. “When we work for a wealthy group like LVMH no one should be earning so little,” she said.Andrea Mantovani for The New York TimesLVMH, which recorded revenue of €44.2 billion in the first nine months of 2021, up 11 percent from 2019, raised wages at Sephora by 0.5 percent this year and granted occasional work bonuses, said Jenny Urbina, a representative of the Confédération Générale du Travail, the union negotiating with the company.Sephora has offered a €30 monthly increase for minimum wage workers, and was not replacing many people who quit, straining the remaining employees, she said.“When we work for a wealthy group like LVMH no one should be earning so little,” said Ms. Urbina, who said she was hired at the minimum wage 18 years ago and now earns €1,819 a month before taxes. “Employees can’t live off of one-time bonuses,” she added. “We want a salary increase to make up for low pay.”Sephora said in a statement that workers demanding higher wages were in a minority, and that “the question of the purchasing power of our employees has always been at the heart” of the company’s concerns.At the European Central Bank, employees’ own worries about purchasing power have lingered despite the bank’s forecast that inflation will fade away.A spokeswoman for the central bank said the 1.3 percent wage increase planned for 2022 is a calculation based on salaries paid at national central banks, and would not change.But with inflation in Germany at 6 percent, the Frankfurt-based bank’s workers will take a big hit, Mr. Bowles said.“It’s not in the mentality of E.C.B. staff to go on strike,” he said. “But even if you have a good salary, you don’t want to see it cut by 4 percent.”Léontine Gallois More

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    Gig Worker Protections Get a Push in European Proposal

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    A proposal with widespread political support would entitle drivers and couriers for companies like Uber to a minimum wage and legal protections.LONDON — In one of the biggest challenges yet to the labor practices at popular ride-hailing and food-delivery services, the European Commission took a major step on Thursday toward requiring companies like Uber to consider their drivers and couriers as employees entitled to a minimum wage and legal protections.The commission proposed rules that, if enacted, would affect up to an estimated 4.1 million people and give the European Union some of the world’s strictest rules for the so-called gig economy. The policy would remake the relationship that ride services, food delivery companies and other platforms have with workers in the 27-nation bloc.Labor unions and other supporters hailed the proposal, which has strong political support, as a breakthrough in the global effort to change the business practices of companies that they say depend on exploiting workers with low pay and weak labor protections.Uber and other companies are expected to lobby against the rules, which must go through several legislative steps before becoming law. The companies have long classified workers as independent contractors to hold down costs and limit legal liabilities. The model provided new conveniences for traveling across town and ordering takeout, and gave millions of people a flexible new way to work when they want.A courier in Paris last year, when lockdown measures highlighted the fragile nature of gig work.Dmitry Kostyukov for The New York TimesBut in Europe, where worker protection laws are traditionally more robust than in the United States, there has been growing momentum for change, particularly as the pandemic highlighted the fragile nature of gig work when food couriers and others continued to work even amid lockdowns and rising Covid-19 cases.While there have been some important legal victories and laws passed in some countries targeting Uber and others, the policy released by the European Commission, the executive branch of the European Union, is the most far-reaching legislative attempt to regulate companies to date.The rules would affect drivers, couriers, home cleaners, home health care aides, fitness coaches and others who use apps and online platforms to find work. As employees, they would be entitled to a minimum wage, holiday pay, unemployment and health benefits, and other legal protections depending on the country where they worked.“New forms of work organization do not automatically translate into quality jobs,” Valdis Dombrovskis, the bloc’s commissioner for trade, said as he presented the new rules. “People involved in platform work can sometimes find themselves exposed to unsafe living and working conditions.” The European Union estimates that 28 million people work through digital labor platforms in the bloc, with their number expected to grow to 43 million by 2025. The commission said on Thursday that 5.5 million workers were at risk of what it called misclassification, and that up to 4.1 million of them could be reclassified as employees through the directive.“This is not just bike riders in big cities,” said Johanna Wenckebach, a lawyer and scientific director at the Hugo Sinzheimer Institute for Labor and Social Security Law in Germany. “This is a phenomenon with millions of workers and many more ahead.”The rules are part of a broader digital agenda that European Union leaders hope to pass in the coming year. Proposals include tougher antitrust regulations targeting the largest tech companies, stricter content moderation rules for Facebook and other internet services to combat illicit material, and new regulations for the use of artificial intelligence.The new labor rules follow a landmark case in February, when Britain’s top court ruled that Uber drivers should be classified as workers entitled to a minimum wage and holiday pay. In the Netherlands, a court ruled in September that Uber drivers should be paid under collective rules in place for taxi drivers.Dutch Uber drivers calling for expanded workers’ rights outside a court in June that would later rule in their favor.Koen Van Weel/EPA, via ShutterstockSupporters of the new worker regulations said companies like Uber behave like employers by controlling workers through software that sets wages, assigns jobs and measures performance — a practice the commission called “algorithmic management.”The new European rules would require companies to disclose more about how their software systems made decisions affecting workers. For those who may remain independent, the new rules would also require companies to grant more autonomy that self-employment entails.The policy threatens the business models of Uber and other platforms, like the food delivery service Deliveroo, that already struggle to turn a profit. The E.U. law could result in billions of dollars in new costs, which are likely to be passed on to customers, potentially reducing use of the apps.Uber opposes the E.U. proposal, saying it would result in higher costs for customers. The company said roughly 250,000 couriers and 135,000 drivers across Europe would lose work under the proposal.Rather than help workers, Uber said the proposal “would have the opposite effect — putting thousands of jobs at risk, crippling small businesses in the wake of the pandemic and damaging vital services that consumers across Europe rely on.”Just Eat, the largest food-delivery service in Europe, said it supported the policy. Jitse Groen, the company’s chief executive, said on Twitter that it would “improve conditions for workers and help them access social protections.”The E.U. rules are being closely watched as a potential model for other governments around the world. Negotiations could last through 2022 or longer as policymakers negotiate a compromise among different European countries and members of the European Parliament who disagree about how aggressive the regulations should be. The law is unlikely to take effect until 2024 or later.Enforcement would be left to the countries where the companies operated. The policy contrasts Europe with the United States, where efforts to regulate app-based ride and delivery services have not gained as much momentum except in a few states and cities.A protest in Bakersfield, Calif., against Proposition 22, a 2020 state ballot question backed by gig economy companies.Tag Christof for The New York TimesLast year, gig economy companies staged a successful referendum campaign in California to keep drivers classified as independent contractors while giving them limited benefits. Although a judge ruled in August that the result violated California’s Constitution, his decision is being appealed, and the companies are pursuing similar legislation in Massachusetts.The Biden administration has suggested that gig workers should be treated as employees, but it has not taken significant steps to change employment laws. In May, the Labor Department reversed a Trump-era rule that would have made it more difficult to reclassify gig workers in the country as employees.In Europe, Spain offers a preview of the potential effects of the E.U. proposal. The country’s so-called Riders Law, enacted in August, required food delivery services such as Uber and Deliveroo to reclassify workers as employees, covering an estimated 30,000 workers.Uber responded by hiring several staffing agencies to hire a fleet of drivers for Uber Eats, a strategy to comply with the law but avoid responsibility for managing thousands of people directly. Deliveroo, which is partly owned by Amazon, abandoned the Spanish market.The companies prefer policies like those in France, where the government has proposed allowing workers to elect union representation that could negotiate with companies on issues like wages and benefits. Uber also pointed to Italy, where a major union and food delivery companies struck a deal that guarantees a minimum wage, insurance and safety equipment, but does not classify the workers as employees.Kim van Sparrentak, a Green lawmaker in the European Parliament who helped draft a report on platform workers that was published this year, praised the commission’s proposal as “quite radical.”“It can set a new standard for workers’ rights,” Ms. Van Sparrentak said.Adam Satariano More

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    U.S. Threat to Squeeze Russia’s Economy Is a Tactic With a Mixed Record

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    Sanctions, like aiming to cut oil exports, could also hurt European allies. “It’s a limited toolbox,” one expert said.LONDON — When Russian soldiers crossed into Ukraine and seized Crimea in 2014, the Obama administration responded with a slate of economic penalties that ultimately imposed sanctions on hundreds of Russian officials and businesses and restricted investments and trade in the nation’s crucial finance, oil and military sectors.Now, with Russian troops massing on Ukraine’s border, the White House national security adviser has declared that President Biden looked Russia’s president, Vladimir V. Putin, in the eye this week “and told him things we didn’t do in 2014 we are prepared to do now.”Whether harsher measures would persuade Russia to stay out of Ukraine, however, is far from clear. Historically, economic sanctions have a decidedly mixed track record, with more failures than successes. And actions that would take the biggest bite out of the Russian economy — like trying to severely curb oil exports — would also be hard on America’s allies in Europe.“We’ve seen that over and over again, that sanctions have a hard time really coercing changes in major policies” said Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics who has spent decades researching the topic. “It’s a limited toolbox.”President Biden is looking at the options available to ratchet up economic penalties against Russia.Stefani Reynolds for The New York TimesThe best chances of success are when one country has significant economic leverage over the other and the policy goal is limited, Mr. Schott said — yet neither of those conditions really applies in this case. Mr. Putin has made clear that he considers Russia’s actions in Ukraine a matter of national security. And outside of the oil industry, Russia’s international trade and investments are limited, especially in the United States.With direct military intervention essentially off the table, Biden administration officials have listed a series of options that include financially punishing Mr. Putin’s closest friends and supporters, blocking the conversion of rubles into dollars, and pressuring Germany to block a new gas pipeline between Russia and Northern Europe from opening.Work on that pipeline — called Nord Stream 2 — has been completed, but it is waiting for approval from Germany’s energy regulator before it can begin operating.Any request from Washington would coincide with a leadership change in Berlin. The new chancellor, Olaf Scholz, and his cabinet were sworn into office on Wednesday. He has not yet made any definitive statements on the pipeline. Gas reserves are unusually low in Europe now, however, and there are worries about shortages and soaring prices as winter approaches.Russia supplies more than a third of Europe’s gas through the existing Nord Stream pipeline and has already been accused of withholding supplies as a way of pressuring Germany to approve Nord Stream 2.Washington could impose much more sweeping sanctions on particular companies and banks in Russia that would more severely curtail investment and production in the energy sector. The risk of tough sanctions on a company like Gazprom, which supplies natural gas, is that Russia could retaliate by cutting its deliveries to Europe.“That would hurt Russia a lot but also hurt Europe,” Mr. Schott said.In terms of ratcheting up the pressure, James Nixey, the director of the Russia-Eurasia program at the Chatham House think tank, suggested that financially squeezing the oligarchs who help Mr. Putin maintain power could be one way of bringing more targeted pressure.“I would place a great premium on going after the inner and outer circle around Putin, which have connections back to the regime,” he said.At the moment, the swirl of ambiguity about possible United States actions is useful, he added: “It’s quite good if the Russians are kept guessing.”Russia, the United States and the European Union — which on Wednesday proposed expanding its power to use economic sanctions — are all playing something of a guessing game in order to pursue their policy goals. Russia is deploying troops on the border and at the same time is insisting on a guarantee that Ukraine won’t join NATO, while the West is warning there will be painful economic consequences if an invasion occurs.Ukrainian soldiers patrolling along the Kalmius River, which divides Ukrainian government-controlled territory from non-government-controlled areas, in November.Brendan Hoffman for The New York TimesOne of the most extreme measures would be to cut off Russia from the system of international payments known as SWIFT that moves money around the world, as was done to Iran.In 2019, the Russian prime minister at the time, Dmitri A. Medvedev, labeled such a threat as tantamount to “a declaration of war.”Maria Shagina argued in a report for the Carnegie Moscow Center that such a move would be devastating to Russia, at least in the short term. “The cutoff would terminate all international transactions, trigger currency volatility, and cause massive capital outflows,” she wrote this year.The SWIFT system, which is based in Belgium, handles international payments among thousands of banks in more than 200 countries.Since 2014, Moscow has taken steps to blunt the threat by developing its own system to process domestic credit card transactions, she noted. But it is another measure that would affect European countries more than the United States because they do so much more business with Russia.Several economic and political analysts have said restricting access to SWIFT would be a last resort.Arie W. Kruglanski, a psychology professor at the University of Maryland, said that in assessing the impact of sanctions, economists too often overlook the crucial psychological aspect.“Sanctions can work when leaders are concerned about economic issues more than anything else,” he said, but he doesn’t think the Russian leader falls into that category. To Mr. Kruglanski, strongman authoritarians like Mr. Putin are motivated by a sense of their own significance, and threats are more likely to stiffen opposition rather than encourage compromise.When it comes to Ukraine-related sanctions so far, the impact has been negligible, Mr. Nixey of Chatham House said.“A lot of these things the Russians have learned to live with, partly because implementation has been slow or poor and effects on the Russian economy are manageable,” he added.Success can be defined in various ways. Mr. Nixey said that the 2014 measures most likely deterred the Kremlin from further military interventions in Ukraine. A report for the Atlantic Council, a think tank that focuses on international relations, released this spring came to the same that conclusion.Sanctions certainly did not compel Russia to reverse its annexation of Crimea, Mr. Nixey said, but they may have persuaded Mr. Putin from taking more aggressive actions — at least until now. More

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    How Omicron Could Knock Economic Recovery Off Track

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    The latest zigzag in the pandemic has already curtailed travel, but its broader impact on growth and inflation isn’t likely to be known for several weeks.LONDON — This week, Marisha Wallace finally had to admit that her planned five-day ski holiday in Switzerland in mid-December was not salvageable: The Swiss government’s sudden decision to impose a 10-day quarantine on some international travelers meant she wouldn’t be able to leave her hotel or return home to London on her scheduled flight.“It’s the way of the world right now,” said Ms. Wallace, an actress and a singer. “You can’t plan anymore.”That provisional state, amplified across the world, has left the still-fragile economy in a state of suspense as spiking coronavirus infections and the new variant Omicron have popped up around the globe.“There’s no way to know how bad it will get,” said Ángel Talavera, head of European economics at Oxford Economics.The forecasting firm has sketched out three scenarios, including one that predicts no discernible effect on economic growth and one severe enough to slash next year’s in half. It will take several weeks before there is more clarity, Oxford concluded.The current round of restrictions has already reduced travel and dampened consumer confidence. A virulent, vaccine-resistant strain could send the economy into a tailspin again, while a mild one could leave health care systems unburdened and allow the recovery to get back on track.As a report released Wednesday from the Organization for Economic Cooperation and Development showed, although growth has been uneven, the world economy this year bounced back more quickly and strongly than had been anticipated. The report, compiled largely before the latest coronavirus news, nevertheless warned that growth was projected to slow: in the eurozone, to 4.3 percent next year from 5.2 percent in 2021; and in the United States, to 3.7 percent in 2022 from 5.6 percent.The organization characterized its outlook as “cautiously optimistic.” But it reiterated how much economic fortunes are inextricably tied to the coronavirus: “The economic policy priority is to get people vaccinated,” the report concluded.Travelers from South Africa being tested at the Amsterdam airport on Tuesday.Remko De Waal/Anp/Agence France-Presse — Getty ImagesIndeed, Omicron’s threat to the recovery is just the latest in a series of zigzags that the world economy has endured since the coronavirus began its march across continents last year. Hopes that an ebbing pandemic would permit daily life and commerce to return to normal have been repeatedly frustrated by the virus.Even before this latest variant was discovered, a fourth wave of infections transformed Europe into a Covid hot spot and prompted new restrictions like lockdowns in the Netherlands and Austria.During earlier outbreaks, trillions in government assistance helped quickly resuscitate the struggling U.S. and European economies. It also brought some unexpected side effects. Combined with pent-up demand, that support helped produce a shortage of labor and materials and rising inflation.Given how much debt was racked up in the past 18 months, such aid is unlikely to recur even with a sharp downturn — and neither are wholesale closures. Vaccines provide some protection, and many people say they are unwilling to go back into hibernation.People and business alike have shifted into a wait-and-see mode. “A lot of things do seem like they are on hold, like labor market or overall consumption decisions,” said Nick Bunker, director of economic research for the job site Indeed.How that will affect unemployment levels and inflation rates is unclear. Jerome H. Powell, the Federal Reserve chair, indicated on Tuesday that concern about stubborn inflation was growing. The O.E.C.D. also warned that inflation could be higher and last longer than originally anticipated.Omicron’s appearance just adds to the uncertainty, Laurence Boone, the organization’s chief economist, said in an interview.The Nativity Hotel in Bethlehem. Israel on Sunday decided to close its borders to foreign tourists after the Omicron variant was detected.Hazem Bader/Agence France-Presse — Getty Images“If it’s something we can cope with, like the virus we have so far, then it may prolong disruptions of the supply chain, and inflation could take longer to sort out,” she said. But if the new variant causes wider shutdowns and plunging confidence, she added, it could reduce the spending binge and dampen rising prices.In recent days, governments have reacted with a confusing hodgepodge of stern warnings, travel bans, mask mandates and testing rules that further cloud the economic outlook. That patchwork response combined with people’s varying tolerance for risk means that, at least in the short term, the virus’s latest swerves will have a vastly different effect depending on where you are and what you do.In France, Luna Park, an annual one-month amusement fair held in the southern city of Nice and slated to open this weekend, was called off after the government suddenly requisitioned the massive warehouse where roller coasters, shooting galleries and merry-go-rounds were being set up in order to convert the space to an emergency vaccination center.“Today I find myself trying to save my company, and I’m not sure that I can,” said Serge Paillon, park’s owner. He feared he would face huge losses, including 500,000 euros (about $566,000) he had already invested in the event, as well as refunds for tickets that had been on sale for several monthsMr. Paillon furloughed 20 employees. Another 200 festival workers who were coming from around the country to manage the 60 games and rides were told to stay home.“For a year and a half, it was already a disaster,” Mr. Paillon said. “And now it’s starting again.”Israel’s decision on Saturday to shut its borders to all foreign tourists for two weeks is likely to reduce the number of tourists in Israel and the occupied territories this December by up to 40,000, or nearly 60 percent of what was expected, according to a government estimate.Wiatt F. Bowers had to cancel his trip to Tel Aviv, the fifth time in 18 months he has had to scrap a planned trip to Israel.Agnes Lopez for The New York TimesWiatt F. Bowers, an urban planner, had planned to leave Jacksonville, Fla., for Tel Aviv on Wednesday but had to cancel — the fifth time in 18 months that he had to scrap a planned trip to Israel. He will rebook, but doesn’t know when.Foreign tourism, which brought a record 4.55 million tourists to Israel in 2019, had already nearly vanished. Between March 2020 and September 2021, nonresident foreigners were barred from entering Israel — and, by extension, the occupied territories, where entry and exit are controlled by Israel.In Bethlehem, where tourism is the main industry, income consequently fell more than 50 percent, said the mayor, Anton Salman, in a phone interview.Elias al-Arja, the chief of the Arab Hotel Association, which represents about 100 Palestinian hotels in the occupied territories, said he was concerned less about the short-term effect of the sudden travel ban than about the long-term message of unpredictability it sent to potential visitors.“The disaster isn’t the groups who canceled over the next two weeks,” Mr. al-Arja said. “How can I convince people to come to the Holy Land after we promised them that you can come, but then the government closes the border?”Reluctance to travel, though, could mean an upswing in other sectors if the new variant is not as harmful as people fear. Jessica Moulton, a senior partner at McKinsey & Company in London, said previous spending patterns during the pandemic showed that some money people would otherwise use for travel would instead be spent on dining.She estimated that the roughly $40 billion that British consumers saved on travel last summer was used for shopping and eating out.At the moment, Ms. Moulton said, “to the extent that Omicron decreases travel, which will happen as we head into Christmas, that will benefit restaurants.”Even before the latest variant was discovered, a fourth wave of infections transformed Europe into a Covid hot spot and prompted new restrictions like lockdowns in Amsterdam.Peter Dejong/Associated PressIn Switzerland, where travelers from Britain and 22 other countries must now quarantine, the effect of the policy change on hotels was immediate.“The majority of travelers from England — between 80 to 90 percent — have already canceled,” said Andreas Züllig, head of HotellerieSuisse, the Swiss hotel association.Ms. Wallace, who canceled her trip to the Cambrian Hotel in Adelboden, was one of several people who changed their reservations at the hotel after the Swiss government made its announcement on Friday, just one week before the slopes open.“This obviously has an impact on our very important winter and Christmas business,” said Anke Lock, the Cambrian’s manager, who estimated that 20 percent of the hotel’s December bookings were at risk.For now, though, most guests are watching and waiting, Ms. Lock said: “We’ve changed the bookings from guaranteed to tentative.”Extreme uncertainty about the economy may turn out to be the only certainty.Patrick Kingsley More

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    As Virus Cases Rise in Europe, an Economic Toll Returns

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    A series of restrictions, including a lockdown in Austria, is expected to put a brake on economic growth.Europe’s already fragile economic recovery is at risk of being undermined by a fourth wave of coronavirus infections now dousing the continent, as governments impose increasingly stringent health restrictions that could reduce foot traffic in shopping centers, discourage travel and thin crowds in restaurants, bars and ski resorts.Austria has imposed the strictest measures, mandating vaccinations and imposing a nationwide lockdown that began on Monday. But economic activity will also be dampened by other safety measures — from vaccine passports in France and Switzerland to a requirement to work from home four days a week in Belgium.“We are expecting a bumpy winter season,” said Stefan Kooths, a research director of the Kiel Institute for the World Economy in Germany. “The pandemic now seems to be affecting the economy more negatively than we originally thought.”The Christmas market in Frankfurt, Germany on Monday. Some German states have imposed partial lockdowns.Kai Pfaffenbach/ReutersThe tough lockdowns that swept Europe during the early months of the pandemic last year ended up shrinking economic output by nearly 15 percent. Buoyed by a raft of government support to businesses and the unemployed, most of those countries managed to scramble back and recoup their losses after vaccines were introduced, infection rates tumbled and restrictions eased.In September, economists optimistically declared that Europe had reached a turning point. In recent weeks, the main threats to the economy seemed to stem from a post-lockdown exuberance that was causing supply-chain bottlenecks, energy-price increases and inflation worries. And widespread vaccinations were expected to defang the pandemic’s bite so that people could continue to freely gather to shop, dine out and travel.What was not expected was a series of tough government restrictions. A highly contagious strain — aided by some resistance to vaccines and flagging support for other anti-infection measures like masks — has enabled the coronavirus to make a comeback in some regions.“The lower vaccination rates are, the gloomier the economic outlook is for this winter term,” Mr. Kooths said.Roughly two-thirds of Europe’s population has been vaccinated, but rates vary widely from country to country. Only a quarter of the population in Bulgaria has received a shot, for example, compared with 81 percent in Portugal, according to the European Center for Disease Prevention and Control.A vaccination line in Lisbon. Covid-19 inoculation rates vary widely among European Union countries; Portugal is among the leaders.Patricia De Melo Moreira/Agence France-Presse — Getty ImagesBefore they were ordered shut, stores in Austria were already suffering a 25 percent loss in revenue for November compared with the same period in 2019, the country’s retail trade association said on Monday. Although the last shopping Saturday before the lockdown — stores in Austria are closed on Sunday — was stronger than that day two years ago, the group said, it would not be enough to make up for the losses expected in the coming weeks.Hotels were not faring much better in the week before the start of the lockdown, with one of every two bookings canceled, Austria’s hotel association, Ö.H.V., said.Still, the overall outlook is not nearly as dire as it was last year. Although several analysts have shaved their forecasts for October, November and December, growth is still expected to be positive, with the yearly increase hovering around the 5 percent mark. Jobless rates have dropped and, in some areas, businesses are complaining of labor shortages.Austria’s response, to impose a three-week lockdown — which shuts all stores except those providing basic necessities, allows restaurants to serve only carryout and requires people to stay home except for essential activities — is not necessarily a bellwether of what other governments across Europe will do. Leaders in France and Britain signaled last week that they were not planning new shutdowns.“We’re not at that point,” Sajid Javid, the British health secretary, said on Sunday. While there can’t be complacency, he added that he hoped people could “look forward to Christmas together.”Claus Vistesen, chief eurozone economist at Pantheon Economics, said that while it was clear that restrictions and lockdowns had a significant and immediate impact on the economy, limited and intermittent closings — like those that already exist in some countries — were less likely to put a huge dent in overall growth.Rising infection rates will also push concerns over inflation — at least in the near future — “a little bit into the background,” he said.Much more difficult to assess, though, are the consequences of widespread restrictions on the unvaccinated or vaccine mandates.For individual businesses and regions, however, even the current limits could prove devastating.Restaurants in Austria will allow only carryout service.Laetitia Vancon for The New York TimesThe weeks leading up to Christmas Day are among the most important shopping days in Austria and Germany, where people gather at outdoor markets to eat, drink and buy gifts. The region’s traditional holiday markets, which normally open from late November until Dec. 24, are also an important tourist draw, and generate wider revenue through hotel bookings and other cultural events.Last year, many markets were completely shut down, so sellers and buyers were looking forward to this year.In Vienna, the market on Maria Theresien Platz opened on Wednesday, its wooden stalls decorated with evergreen boughs and fairy lights. But the vendors were forced to shut down after only four days.Maria Kissova stood amid piles of tablecloths, pillow covers and lace ornaments she had brought in from neighboring Slovakia, where she employs several women to sew the crafts. This year was her first time coming to Vienna, a trip that required months of planning and paperwork. With the lockdown, she faced the prospect of only several days’ worth of shopping, if the market is allowed to reopen as planned in mid-December.“It was a shock” when the lockdown was announced, she said, adding that it was too early to predict the scale of the losses she could incur. “We just have to accept it.”For Daniel Zieman, who ran a gift stand across the square between Vienna’s Natural History and Art History Museums, the story was the same. But he worried about the staff at the restaurant serving typical Austrian fare that he runs on the edge of town, many of whom count on the tips coming in from waiting tables in the normally busy season. Lost tips won’t be included in the government subsidies that will help keep people afloat.“Many of our staff have children, and you count on a certain percent from these tips every month,” he said. “That won’t be there.”The holiday season is when many restaurants do their biggest business, with companies holding end-of-year events, he said. “That is really good business, with 30 to 40 people who eat and drink and drink again and eat again. It’s a real shame,” he said.The Czech Republic and Slovakia have also imposed new restrictions. In Germany, some states have introduced partial lockdowns, and starting Wednesday, the unvaccinated will be required to show a negative Covid test before going to work.By the end of this winter, pretty much everyone in Germany “will be vaccinated, cured or dead,” Jens Spahn, the health minister, said on Monday.A nationwide closure in Germany, the continent’s largest economy, is unlikely at the moment, but Carl B. Weinberg, chief economist at High Frequency Economics, warned that one there would drag down all of Europe. “If Germany locks down, Europe is going to go back into recession,” he said.In France, Europe’s second-largest economy, President Emmanuel Macron is loath to reverse economic gains when a major election is scheduled in April. Despite warnings by health experts that another wave of coronavirus is hitting France “with lightning speed,” Mr. Macron said last week that he wouldn’t close parts of the economy again or follow Austria.Nearly 70 percent of the French population has been double vaccinated, and the country imposed a health pass earlier this year requiring people to show proof of vaccination to travel on trains and planes and enter restaurants, cinemas and large shopping centers.The government will now require a booster dose for people 65 or older for the pass to remain valid, and France’s Health Defense Council will meet on Wednesday with Mr. Macron to discuss other options to slow the spread of the coronavirus.The government, a spokesman said this week, is bringing “the weight of restrictions to bear on nonvaccinated people rather than vaccinated people.”Liz Alderman More

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    European Steel Plan Shows Biden’s Bid to Merge Climate and Trade Policy

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    A potential agreement on steel trade provides the clearest look yet at how the Biden administration plans to implement a trade policy that is both protectionist and progressiveWASHINGTON — President Biden has promised to use trade policy as a tool to mitigate climate change. This weekend, the administration provided its first look at how it plans to mesh those policy goals, saying the United States and the European Union would try to curb carbon emissions as part of a trade deal covering steel and aluminum.The arrangement, which American and European leaders aim to introduce by 2024, would use tariffs or other tools to encourage the production and trade of metals made with fewer carbon emissions in places including the United States and European Union, and block dirtier steel and aluminum produced in countries including China.If finalized, it would be the first time a U.S. trade agreement includes specific targets on carbon emissions, said Ben Beachy, the director of the Sierra Club’s Living Economy program.“No U.S. trade deal to date has even mentioned climate change, much less included binding climate standards,” said Mr. Beachy.The announcement was short on details, and negotiations with European leaders are likely to face multiple roadblocks. But it provided an outline for how the Biden administration hopes to knit together its concerns about trade and climate and work with allies to take on a recalcitrant China, at a time when progress on multicountry trade negotiations at the World Trade Organization has stalled.“The U.S. leads the world in our clean steel technology,” Gina Raimondo, the secretary of commerce, said in an interview on Monday. She said the United States would work with allies “to preference cleaner steel, which will create an incentive to make more investments in technology,” resulting in fewer carbon emissions and more jobs.In the same interview, Katherine Tai, the United States Trade Representative, said the potential agreement would restrict market access for countries that don’t meet certain carbon standards, or that engage in nonmarket practices and contribute to global overcapacity in the steel sector — accusations that are often levied at China.The effort would seek to build “a global arrangement that promotes not just fair trade in steel but also pro-climate and responsible trade in steel,” Ms. Tai said.Kevin Dempsey, the president of the American Iron and Steel Institute, said at an industry forum in Washington on Tuesday that the arrangement would be “positive for the U.S. industry,” which has the lowest carbon intensity per ton of steel of the major steel-producing countries.China accounts for nearly 60 percent of global steel production. Its use of a common steel-production method causes more than twice as much climate pollution as does the same technology in the United States, according to estimates by Global Efficiency Intelligence.In its announcement on Saturday, the Biden administration also said it had reached a deal to ease the tariffs that former President Donald J. Trump had imposed on European metals while the governments work toward the carbon accord.The United States would replace the 25 percent tariff on European steel and a 10 percent tariff on European aluminum with a so-called tariff-rate quota. In return, the European Union would drop the retaliatory tariffs it imposed on other American products, like bourbon and motorcycles.Under the new terms, 3.3 million metric tons of European steel would be allowed to enter the United States duty-free each year, with any steel above that volume subject to a 25 percent tariff.European producers would be allowed to ship 18,000 metric tons of unwrought aluminum, which often comes in the form of ingots, and 366,000 metric tons of wrought or semifinished aluminum into the United States each year, while volumes above that would be charged a 10 percent tariff, the commerce department said.To qualify for zero tariffs, the steel must be entirely made in the European Union — a provision designed to keep cheaper steel from countries including China and Russia from finding a backdoor into the United States via Europe.Supporters of free trade have criticized the Biden administration for relying on the same protectionist trade measures used by the Trump administration, which deployed both tariffs and quotas to protect domestic metal makers.Jake Colvin, the president of the National Foreign Trade Council, said the announcement would ratchet down trade tensions between the United States and Europe. But he called the trade barriers “an unwelcome form of managed trade” that would add costs and undermine American competitiveness.Ms. Tai said the administration had made a deliberate choice not to heed calls “for the president to just undo everything that the Trump administration had done on trade.”Mr. Biden’s plan, she said, “is that we formulate a worker-centered trade policy. And that means not actually going back to the way things were in 2015 and 2016, challenging us to do trade in a different way from how we’ve done it earlier, but also, critically, to challenge us to do trade in a way different from how the Trump administration did.”A factory in southern China that makes steel parts. The trade proposal would block dirtier steel and aluminum produced in countries including China.The New York TimesThe focus on carbon emissions differs from that of the Trump administration, which rejected any attempts to negotiate on carbon mitigation and withdrew the United States from the Paris Agreement on climate change.But negotiations with Europe will face challenges, among them developing a common methodology for measuring how much carbon is emitted as certain products are made. Still, the announcement suggests that the United States and Europe might be ready to work toward a collaborative approach on lowering carbon emissions, despite past differences on how the problem should be addressed.European leaders have long advocated an explicit price on the carbon dioxide that companies emit while making their products. In July, the European Union proposed a carbon border adjustment mechanism that would require companies to pay for carbon emissions produced outside Europe, to discourage manufacturers from evading Europe’s restrictions on pollution by moving abroad.An explicit tax on carbon has met with more resistance in the United States, where some politicians want to update regulatory requirements or put the onus on companies to invest in cleaner production technology.Todd Tucker, the director of governance studies at the Roosevelt Institute, said the latest announcement suggested that the European Union may be “a little bit more flexible” on how the United States and other partners would go about lowering emissions. Mr. Biden’s reconciliation bill, for example, contains a proposal for a “green bank” that could provide financing for firms to transition to cleaner technologies, he said.“If the U.S. ends up achieving decarbonization through more of an investments and industrial-policy approach, it seems like they’re OK with that,” Mr. Tucker said.Though the earliest negotiations over carbon emissions in the steel sector involve the European Union, the Biden administration says it wants to quickly extend the partnership to other countries.In twin announcements on Sunday, the Department of Commerce said it had begun close consultations with Japan and the United Kingdom “on bilateral and multilateral issues related to steel and aluminum,” with a focus on “the need for like-minded countries to take collective action.”Both Japan and the United Kingdom still face a 25 percent tariff on steel exports to the United States imposed by Mr. Trump.The talks suggest a template for how the Biden administration will try to engage allies to counter China’s growing economic heft and make progress on goals like climate and workers rights.The administration has rejected Mr. Trump’s “America First” approach to trade, saying the United States needs to work with like-minded countries. But they have also acknowledged that the inefficiency of negotiations at the World Trade Organization, and distanced themselves from broader, multicountry trade deals, like the Trans-Pacific Partnership.The announcements suggest that the Biden administration may not see comprehensive trade deals as the most effective way to accomplish many of its goals, but rather, industry-specific agreements among a limited number of democratic, free-market countries. That approach is similar to the cooperation the United States announced with the European Union for the civil aircraft industry in June.Ms. Raimondo said the agreement to ease the tariffs on the European Union was a “very significant achievement” that would help to alleviate supply chain problems and lower prices for companies that use steel and aluminum to make other products.“It’s all kind of a table setter to a global arrangement, whereby we work with our allies all over the world over the next couple of years,” she said. More