With the Inflation Reduction Act, the United States is sealing off parts of its economy with subsidies. The law provides benefits for companies that produce in the USA. At the urging of the EU Commission, European companies should now also benefit from the advantages.
The EU Commission sees a concession from the USA in the dispute over a multi-billion dollar subsidy program for US companies. The EU Commission announced that new guidelines had confirmed that European companies could also benefit in part. “This is a win-win for both sides as it strengthens EU-US cooperation on the common goal of tackling climate change and boosts transatlantic supply chains,” the Brussels agency wrote.
US President Joe Biden signed the Inflation Reduction Act in August. The law provides for a $370 billion aid program that will, among other things, strengthen renewable energy and industry in the fight against climate change. However, this also includes clauses that the companies must invest and produce in the USA.
This has alarmed the EU, which fears that European companies will also move their production overseas. The Commission is convinced that EU companies are disadvantaged compared to their US competitors. The EU is pushing for exceptions in the law, as there are for Canada and Mexico.
The US Treasury Department and the US Internal Revenue Service (IRS) released additional information on the electric vehicle tax breaks provided for in the law. Specifically, according to the EU Commission, the new guidelines stipulate that at least certain tax credits for commercial vehicles can also benefit European companies.
For example, EU companies could lease electric cars to American citizens. Overall, however, the Commission wrote that the Inflation Reduction Act remains a concern and the EU continues to strive to ensure that EU manufacturers are not discriminated against under the law. Further talks would be held with the USA.
