ASSESSMENTS

Assessing Europe’s Concerns and Potential Response to the U.S. Inflation Reduction Act

MIN READDec 5, 2022 | 17:28 GMT

U.S. President Joe Biden (right) and French President Emmanuel Macron walk down the Colonnade at the White House in Washington, D.C., on Dec. 1, 2022.

U.S. President Joe Biden (right) and French President Emmanuel Macron walk outside the White House in Washington, D.C., on Dec. 1, 2022.

(LUDOVIC MARIN/AFP via Getty Images)

The U.S. Inflation Reduction Act will force the European Union to increase subsidies for green technologies and adopt local content requirements to protect its green industrial base and mitigate the continent's deindustrialization. But this will come at the cost of alienating some EU trade partners and potentially distorting competition in the bloc's single market. French President Emmanuel Macron traveled to the United States on Nov. 29 where he met with President Joe Biden on Dec. 1. One of the main topics on Macron's agenda was the White House's plan to provide subsidies and financial assistance for U.S. companies in the clean energy sector under the soon-to-be-implemented Inflation Reduction Act (IRA), which the European Union sees as discriminatory against its companies. Macron secured an apparent concession from Biden, who promised ''tweaks'' to ''fundamentally make it easier for European countries to participate and/or be on their own.'' But what those tweaks may...

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