'Buy America’ strategy: a wake-up call for Europe

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.

ain’t fascism great?

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These policies are great, that’s all I know. Smarter people can debate the isms.

Stronger domestic supply chains are awesome.

yes, of course, the left loves fascism.

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I would hardly call Biden’s policies great. As for the EU, their complaint is more a case of the lady doth protest a little too much. They have individually, and collectively, used protectionist policies for decades.

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Over the next ten years, the IRA will dole out up to $369 billion in tax credits and direct rebates to help firms scale up the production of green, cutting-edge technology – but only if these products are predominantly manufactured in North America.

Brussels considers this provision to be discriminatory, unfair and illegal, and fears the allure of the generous American bill will trigger an industrial exodus across the Atlantic Ocean, dealing a fatal blow to the EU’s long-term competitiveness

In cases where the risk of relocation is high, countries will be able to match the subsidies offered by a non-European government, such as the US, and retain the company within EU borders. Alternatively, countries will be able to compensate for the funding gap the company estimates to have.

The IRA is turbocharging the energy transition on two continents.

Anyone else remember when “IRA” was immediately associated with terrorists? :wink:

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What is fascist about the Buy American policies?

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:popcorn: :tea:

I’d like to see that as well.

This policy.

I couldn’t agree more.

Well it depends on if the policies actually help strengthen American supply chains…:sunglasses:

How much

whats not fascist about the government getting in bed with industry to control what they manufacture? VW’s are okay, but i’d rather not pay for yours

Fracturing relationships brtween the US and her allies os exactly what China wants… and Bidem is delivering on spades. A botched Afganistsn withdrawal, renegging on Canada’s pipeline, destroying the Nordstream pipeline, forcong a prologatipn of the Russia-Ukraine war on Europe’s doorstep. Biden won’t follow through on this policy. It’s just temporary rhetoric to upset Europe.