French President Emmanuel Macron asked Joe Biden about the new Inflation Reduction Act (IRA) during his visit to the United States. The European Nations consider this IRA Act is against foreign companies. Mr. Macron called this Act very aggressive against European businesses and wants some action against it before The IRA Act will come into effect on January 1st, 2023 at the Library of Congress.
The Inflation Reduction Act (IRA)
The Inflation Reduction Act (IRA) is a $430 billion package of government expenditures, taxes, credits, and charges, and it is meant to tackle climate change, lower healthcare costs, and require major businesses to pay their “fair share” of taxes. The main aim of this Act is to low down inflation in the country and to shift to clean energy while combining climate action ambitions with an industrial plan by encouraging local production of components for renewable energy resources. This Act also helps the United States to become less dependent on China for raw materials and various parts for the energy sector.
Problems Faced By European Countries
The 27 European member states worry that the Inflation Reduction Act (IRA) tax credits and subsidies to manufacturers of EVs and other green products in North America and free-trade partner nations would disadvantage European industries and may lead these companies to shift important components of their supply chains to the United States.
Japan and South Korea also raised their voice against this Act. The IRA raises concerns about manufacturers migrating to the United States. Several automakers, battery manufacturers, and energy businesses have already made statements or expressed interest in opening up shops in the U.S.
Statement Of The United States
President Joe Biden stated that The Inflation Reduction Act might need some minor adjustments to make it simpler for European nations. He emphasized, though, that the United States makes no apologies for supporting American industry and will keep generating employment for its citizens. This Act never designs to isolate European nations.