Almost two years on, the angst is being felt on the other side of the Atlantic. Following on from President Joe Biden’s “Buy America” rules for infrastructure, his Inflation Reduction Act (IRA) will deliver, from January, almost $370bn worth of subsidies and tax breaks to US-based companies involved in the transition to a low-carbon economy. Around $50bn will come in the form of tax credits to persuade Americans to buy electric vehicles made in North America (Canada and Mexico were included in the deal after initially being left out).
there is a fear that the lure of huge American subsidies will accelerate an industrial exodus
https://www.cnn.com/2022/12/02/business/eu-us-trade-thierry-breton/index.html
The Inflation Reduction Act has become an acute source of tension between the allies. The sweeping $750 billion health care, tax and climate bill, which became law in August, includes billions of dollars in subsidies for electric vehicles made in North America.
Europe fears that generous tax breaks for US-made parts will put its companies at a disadvantage.
PRESIDENT MACRON: (As interpreted.) What we’ve been discussing with President Biden and what, as a matter of fact, he just said — and that’s what I talked about with the caucus yesterday — that simple: The United States of America adopted a piece of legislation for their country, for their industry with a common objective, goal that we share: creating jobs, creating opportunities for the middle class, and succeeding in implementing the energy transition.
The reality is that the consequences, as we’ve seen in our discussions — it is certainly not the intention of the United States, but, as a matter of fact, project that were growing — being developed in Europe, there’s such a difference in subsidies that these projects might come to an end.
Biden’s industrial policy is creating such a business-friendly environment in America that EU countries are feeling pressed.
Antagonizing them is not the goal, but as Biden said:
No, look, the United States makes no apology — and I make no apologies, since I wrote it — for — the — the legislation you’re talking about.
If Biden can massage the rules to be a little softer to the EU, great. But he’s pretty clear that we’re going to do what we have to do to grow American supply chains.