The United States and Washington concerning Washington’s multibillion-dollar climate protection package and inflation program.
The Inflation Reduction Act (IRA), which was passed by Congress in August, has caused transatlantic ties to become more fluid.
What was Lindner’s response?
In comments published before the publication, he stated that the USA was our partner in shared values but has a very protectionist economic policy.
He said that Washington must be represented by the federal government on behalf of Germany and warn about the potential negative consequences for the country.
Lindner stated that Germany’s economy is not like France’s and closely tied to the US market. He was referring specifically to the US as a large market for German automobiles while French carmakers don’t export there.
“That is why Germany cannot have any interest in trade wars, but must rely on economic diplomacy.”
Lindner’s comments follow an earlier call by Robert Habeck, German Economy Minister, for a “robust response” by Brussels to the US new subsidies.
What is the Inflation Reduction Act?
The IRA provides $370 million (EUR357 billion), for climate protection, and energy security. This includes subsidies for electric cars and batteries, as well as for renewable energy projects made in the USA.
The bill provides tax credits for eligible components of renewable energy produced in the US and a further 30% tax credit on new or upgraded factories that produce green components.
Why is the EU concerned about the IRA?
EU-based politicians and business leaders have sharply criticised the subsidies as being detrimental to European companies.
EU leaders claim that EUR200 billion ($207billion) of the total amount is linked to provisions for US manufacturing that could violate World Trade Organization rules.
They also note that EU state aid rules prohibit EU countries offering the same tax incentives as the US to companies looking for factories to be set up.
Washington isn’t Washington’s only enemy because of the new subsidies. South Korea also expressed concern that the US will deny its automakers tax breaks.
Macron’s ‘glitches’ in the IRA are appeased by Biden
During a recent visit to the United States, Emmanuel Macron, the French President, described Washington’s tax cuts as “super aggressive” while warning that the package would “divide West.”
Biden admitted that there are “glitches” within the IRA, which favors American-made climate technologies. He added, however, that “there are tweaks” he could make to please allies.
Many Democratic legislators said that they did not intend to revisit the legislation despite their conciliatory words. The legislation passed after more than one year of negotiations and without Republican support.
A French Finance Ministry source told us Thursday that the White House could issue executive orders to grant European allies the same exemptions as the rest of the world. This would prevent a bidding war over protective and subsidies tariffs.