French Finance Minister Bruno Le Maire said US subsidies will cause damage to the European economy.
France warned the United States that the climate and energy law it just passed threatens European economies and urged the Biden administration to enact the law so subsidies for American electric vehicles do not disadvantage automakers European.
The warning came during the Group of 20 leaders’ summit in Bali, where senior officials gathered to discuss the plight of a global economy plagued by inflation and war. Tension between Europe and the United States over the Inflation Reduction Act is straining relations between allies who have shown unity in confrontation with Russia over its war with Ukraine, but reflects growing concern about an economic slowdown.
The United States government defends the interests of its country
“I think we can fully understand the determination of the US government to defend its economic interests and promote greener technologies,” Bruno Le Maire, France’s finance minister, told reporters on the sidelines of the G20 meetings. “But this should have no negative side effects on their European allies and the European economy. »
France and other European countries are concerned about more than $50 billion in tax credits intended to entice Americans to buy electric vehicles. The law limits these credits to vehicles assembled in North America.
The law also sets stringent requirements for the components that power electric vehicles, including batteries and the essential minerals used to make them. This incentivizes battery makers to build recycling and manufacturing facilities in the United States.
The mayor raised his concerns directly with Treasury Secretary Janet L. Yellen at a meeting this week. France and many European economies fear that an increase in protectionism could further slow the global economy and Le Maire does not think it would be financially wise to engage in a race with the United States to subsidize domestic industries.
After her meeting with Mr Le Maire on Monday, Ms Yellen said the US is ready to listen to the concerns of France and other countries about the law and will try to address them.
“We are prepared, within the limits of the law passed by Congress, to work with them to address their concerns to the extent possible,” Ms. Yellen said.
US law is unlikely to be changed by Congress and it is unclear what authority Ms Yellen has to implement the tax credits in a way that addresses European concerns.
In the interview, Le Maire highlighted the economic headwinds France and Europe face as a Russian oil embargo takes effect next month, which could drive up oil prices this winter. He said the Inflation Reduction Act had made these economic threats worse and that it was urgent for the two countries to find a solution before President Emmanuel Macron’s visit to Washington in early December.
“We don’t want Europe to weaken after the war in Ukraine,” Le Maire said.
