Trade war between the European Union and the US?

Provisions of the Inflation Reduction Act (IRA), passed by the US Congress in recent months, pitted the EU against the US. The escalation also raised concerns about the trade war .

The law includes provisions to provide tax breaks for various products that are made in the US This means that companies move their investments to the US and that many industrial companies, especially auto giants, pull out of Europe. . This infuriates EU politicians.

WORKING GROUP IS CREATED

According to the Financial Times, while the EU and the US, Brussels and Washington formed a working group to address the “buy American” provisions of the US Inflation Reduction Act, the European capitals are preparing to take measures that could end in a trade war. He started to do it.

While EU ministers are currently trying to head off a potential trade war, time is running out to resolve the worsening dispute with the US over $369 billion in green subsidies.

EU MINISTERS ARE ANGRY

Czech minister Jozef Sikela, who chaired the meeting of EU trade ministers in Brussels on Friday, said he wanted a solution before the Trade and Technology Council meeting on December 5.

“What is important to us is that the United States is aware of our concerns and that the task force must find a solution that is acceptable to both parties,” Sikela said. Sikela also highlighted growing concern in the EU over the scale of the US subsidy scheme.

Dutch Trade Minister Liesje Schreinemacher described the law as “very worrying” and said: “I want to avoid a trade war by any means necessary. Nobody benefits from any trade war,” she said.

Irish Deputy Prime Minister Leo Varadkar said: “There will be an EU response to the US. “Nobody wants to get into the race for subsidies, but what the United States is doing is really not in line with the principles of free trade and fair competition,” he said.

Some EU members, such as France, urged Brussels to copy the US law. The country proposed to the EU its own “Buy in Europe” law, while German Finance Minister Robert Habeck suggested increasing subsidies.

Smaller liberal states such as the Netherlands and Sweden have warned against a subsidy race that could provoke retaliation from other trading partners.

WHAT DOES THE NEW LAW BRING?

The law, called the IRA, gives American consumers and businesses tax credits and subsidies for products like electric vehicles, wind turbines and green hydrogen. However, these subsidies are generally provided for products made in the US.

The law will go into effect on January 1. However, many EU companies have already announced that they will choose the US over Europe for their next investment. In addition to the tax advantages, lower energy prices in the US were also effective in this.