Germany and France have warned that a recently passed US climate, social and tax package could create an unlevel playing field between Europe and the United States.
“We’re seeing companies and businesses migrating from Europe to the United States for higher subsidies, and we can’t get into a trade war at a time like this,” Germany’s Economics and Climate Minister Robert Habeck said in a joint video press conference the French Economics and Finance Minister Bruno Le Maire, which was also attended by Federal Finance Minister Christian Lindner.
Root of the controversy: anti-inflation law
Le Maire said he thinks the US Inflation Reduction Act is a concern not only for France and Germany but for all European countries.
The Inflation Reduction Act is a massive $430 billion investment program passed by the US Congress in August. Among other things, it includes tax incentives for the expansion of renewable energy, a tax of at least 15 percent for companies with a profit of more than $1 billion and price reductions for prescription drugs.
Some Europeans see this as Washington’s aggressive trade policy, such as subsidizing only electric cars manufactured in North America.
He called for a strong European response. However, what it might look like has not been detailed. However, Le Maire insisted that “Like with Like” is not paid for, but that the answer should suffice.
“strong European response”
Habach also remained rather vague, but assured that “good talks” were being held with American partners and that a “strong, strong European response was necessary”.