According to the European Commission, the US Inflation Reduction Act may negatively affect some sectors of the European economy.
The document describes the financial support of some sectors of the US economy, including those related to green energy. The EC supposes that the act may threaten the competitiveness of some sectors of the European economy.
EU Executive Vice President Margrethe Vestager said that a closer analysis of the subsidies suggests “the main threats to European competitiveness will be limited to a handful of sectors.” She also added that some European companies could start investing in the US economy.
The Inflation Reduction Act reads that the subsidies will be applied to such EU sectors as the production of wind turbines, batteries for electric vehicles, as well as the extraction and processing of raw materials for the manufacture of these goods. Against the backdrop, the US may suspend the rapid development of green industries in Europe or, on the contrary, give them the green light.
Notably, in August 2022, US President Joe Biden signed the Inflation Reduction Act, which allows the expansion and extension of existing energy-related tax credits. What is more, the government allocated $370 billion to develop green energy and reach climate goals. Meanwhile, the sum of $64 billion was used to lower the price of medicines and health insurance. Such measures may boost investments in these economic sectors.
Earlier, the European Commission emphasized that the act discriminates against European companies and threatens the industrial base of the European Union. EU leaders are currently negotiating the issue with the United States.
