European Union leaders are threatening trade retaliation over provisions in the Democrats' Inflation Reduction Act subsidizing electric vehicle purchases that are meant to reshore production.
The law requires electric vehicles to be assembled in North America to qualify for tax credits of up to $7,500 per electric vehicle and will institute strict sourcing requirements for battery components in 2024. Those provisions, included at the insistence of Sen. Joe Manchin , are meant to boost domestic manufacturing.
“We need a Buy European Act like the Americans, we need to reserve [our subsidies] for our European manufacturers,” Macron told the news outlet France 2. “You have China that is protecting its industry, the U.S. that is protecting its industry, and Europe that is an open house." The U.S. and EU announced Wednesday that they will launch a joint task force beginning next week to discuss the new law.
European Commission Vice President Margrethe Vestager said earlier this week that the Inflation Reduction Act and tax incentives pose a great risk to some of Europe’s businesses.
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