German Chancellor Olaf Scholz and French President Emmanuel Macron are seeking to try to clinch “a negotiated solution” with Washington over “unfair competition from the US” and the possible need for the EU to strike back, US media reports.
The two discussed the issue during their recent talks in Paris, where they in particular voiced concern over US state subsidy plans, which “represent market-distorting measures” aimed at making companies shift their production to America.
Scholz and Macron agreed that the EU should respond if the US goes ahead with the Inflation Reduction Act in its “current form”.
The legislation, which was adopted in early August, specifically stipulates tax reductions and energy benefits for those companies, which invest on US territory. Additionally, the act encourages consumers to “Buy American” in terms of picking an electric vehicle.
The message from the Paris talks is the following: “if the US doesn’t scale back, then the EU will have to strike back”, which may in turn “risk plunging transatlantic relations into a new trade war”.
The consensus on the matter was clinched despite what US media described as “icy relations” between Macron and Scholz, who didn’t even hold a joint press conference after the negotiations although one of the French president’s advisers touted the talks as “very constructive and strategic”. The adviser was echoed by a German official who dubbed the two’s meeting “a complete success”.
The talks were followed by Macron telling the TV channel France 2 that the EU needs “a Buy European Act like the Americans” and should reserve its subsidies] for its European manufacturers.
“You have China that is protecting its industry, the U.S. that is protecting its industry and Europe that is an open house”, the French president pointed out, adding that he and Scholz “have a real convergence to move forward on the topic”.
The remarks came after Scholz said earlier this month that Berlin will discuss the US’ Inflation Reduction Act with Washington “in great depth” in order to address competition concerns. He stressed that Germany should cooperate with other countries to prevent "a massive customs war between all kinds of countries”.
The trade war between Brussels and Washington broke out in 2018 oven then-incumbent US President Donald Trump's tariffs strategy to change the national trade policy and reduce the trade deficit.
The Trump administration slapped tariffs on steel and aluminum imported from the bloc, while the EU retaliated with 25 percent levies on US motorcycles and other items, including whisky.