EU De-Industrialization And The Biden Bill -- The Inflation Reduction Act -- December 6, 2022

Updates

Later, 9:49 a.m. CT, op-ed, WSJ: link here. 

Wasn’t President Biden going to end Donald Trump’s destructive trade wars against allies? Apparently not.

His “super aggressive” climate protectionism—to quote French President Emmanuel Macron—is infuriating U.S. friends and may set off a subsidy and tariff war.

U.S. allies are upset about the Inflation Reduction Act’s generous subsidies for domestically manufactured green technologies.

In his trip to Washington last week, Mr. Macron said the U.S. subsidies may “perhaps fix your issue but you will increase my problem.

They’re really a problem for everybody.The dispute involves tax credits for electric-vehicle and battery production. The IRA’s $7,500 consumer tax credit are restricted to EVs assembled in North America. Most foreign auto makers make EVs abroad and export them because the global and U.S. markets are still small. They can’t tap the consumer tax credit unless they invest in American production. But making EVs in the U.S.—or Canada or Mexico—may be more costly and could render their cars less competitive in other export markets. Half of the U.S. $7,500 tax credit is also contingent on an increasing share of the vehicle’s battery minerals being extracted or processed in the U.S. or a country in which the U.S. has a free-trade agreement—starting at 40% in 2023 and increasing to 80% in 2027.

The other half will be available only to EVs whose battery components are mostly made in North America, starting at 50% in 2023 and reaching 100% by 2029.

Much more at the link.

Original Post

I just blogged about this yesterday. 

Link here.

President Biden is getting into the holiday spirit by slapping a bow and some American Flag wrapping paper on a sweet little surprise for Europe...The Inflation Reduction Act.

Inside they'll find a wide array of pro-American manufacturing programs that are less than favorable for the Europeans. Europe has enjoyed 75 years of safe and lucrative trade thanks to the guns and butter deal we know as globalization, but the Americans have outgrown that model.

They are ready to bring some of their manufacturing home, and not in a small quantity...we're talking 12 zeros here.

This comes at a time when Biden needs some new footing with the organized labor faction and nothing speaks louder than money. Europe isn't happy about the American's leveling out the playing field and WTO action has been threatened, but at the end of the day, the Biden administration is going to get its way.