Germany's Finance Minister Christian Lindner said on Monday that the EU and the US need dialogue to ease trade tensions triggered by the US Inflation Reduction Act, which is threatening European businesses and industry, Reuters reported.
Linder's remarks are part of a recent backlash in the EU against the US Inflation Reduction Act. The EU has "serious concerns" about the act, saying it breaches international trade rules, according to an official document seen by CNBC.
However, despite the growing backlash, it would be naive for the EU to think that it can change the US policy tendency to protectionism through "dialogue."
In the document that will be reportedly presented to US officials, the EU listed nine of the provisions in the legislation, which restrict subsidies and tax credits to products made in the US or companies operating there. In particular, a tax credit worth $7,500 will be offered to purchases of electric vehicles that are assembled in Canada, Mexico and the US. Moreover, to qualify for the tax credit, electric carmakers must also source a significant percentage of major battery components, including metals like lithium, nickel and cobalt, from the US or countries that have free trade agreements with the US.
While the Biden administration touted the Inflation Reduction Act as efforts to boost domestic manufacturing in clean energy areas, the legislation is threatening global electric carmakers and upstream suppliers to locate plants and produce goods in the US or they will face the prospect of being shut out of the market.
Over the years, with the booming development of the global electric vehicle industry, relevant industrial chains and supply chains have been intricately intertwined among various countries. This is also why many countries only require electric vehicles to be assembled within the borders when it comes to making subsidy policy for new-energy vehicles, with no requirement for the localization of the entire supply chain.
Therefore, the US' overreach in its so-called Inflation Reduction Act in stipulating places where battery minerals and units should be processed is a clear discrimination against foreign products, a typical protectionist move. Ironically, the US often accuses China of failing to meet its free-trade commitments, even as it takes protectionist moves against foreign companies. New-energy vehicle makers in China, both domestic and foreign ones, are entitled to industry subsidies as long as they meet criteria.
Moreover, it should be noted that building barriers through subsidies will not only cause improper disruptions in the global industrial chain and supply chain of electric vehicles, but will also trigger a series of chain reactions by generating major shocks to the global economy. This is because with the US' legislation undercutting others' industries, it is possible for European and Asian countries to follow suit to roll out their own countermeasures.
For instance, the EU threatened on Monday to take retaliatory measures against the US for electric car subsidies that will put European industries at a huge disadvantage. German Chancellor Olaf Scholz warned last month that the US' measures could trigger "a huge tariff war," the Radio France International reported. This means that the US' Inflation Reduction Act has the potential to trigger a trade war between the US and the EU, with more discriminatory trade measures to be issued by the two sides if Europe's concerns are not addressed. Against the backdrop of a global economic slowdown, such prospects seem all the more likely.
Indeed, not only the EU but also Asian economies like South Korea and Japan will be drawn into a dangerous trade confrontation to protect their interests from US protectionism. Japan and South Korea - both are important players in the industrial chain - have expressed concerns about the US' unfair subsidy policy. China is also a major producer of electric vehicles.
The US government has made the reshoring of manufacturing an important part of its economic policy in recent years. In the past, it tried to mainly target Chinese manufacturing to achieve the goals. But now the Biden administration's new legislation lays bare the fact that the US doesn't care whether manufacturing jobs will flow back to the US from China or from Europe and whether it will have a devastating impact on free trade and the global industrial and supply chains. In this sense, the US Inflation Reduction Act is dragging the global economy and trade into the abyss.
Any moment now I am expecting John Cleese (a veteran of Monty Python) to jump out of the bushes and announce the creation of the Ministry of Silly Wars, with Donald Trump as the deranged leader. For you youngsters out there, Monty Python’s skit, The Ministry of Silly Walks, helped make the members of MP legends. I had to reference Monty Python because the line of bullshit the Trump administration is feeding the American people and the world about the amazing, obliterating US attack on Iranian nuclear sites on Sunday morning, is more ridiculous that all of the silly walks pictured in the following video:
My hopes that Donald Trump would finally act like a responsible adult are dashed. He’s a dangerous buffoon. While the team around him are working frantically to maintain the fiction that Trump has a vision and is calling the shots on the foreign policy front, he is careening around the globe like an out-of-control cue ball on a billiards table. It started a week ago… first, he claimed...
Tuesday marks the third anniversary of the launch of the Fujian, China's first aircraft carrier equipped with electromagnetic catapults. Official media said China is about to enter a three-aircraft-carrier era, with the Fujian expected to enter service by 2025.
After the launch of the Fujian on June 17, 2022, it carried out its first sea trial from May 1 to 8 in 2024. Since then, the Fujian has completed multiple sea trials, accumulating more than 100 days of sea trial, China Central Television (CCTV) News reported on Tuesday.
Wei Dongxu, a Chinese military affairs commentator, said that the aircraft carrier Fujian has been making steady progress in sea trials, and is expected to be commissioned within this year, CCTV News reported.
With a full displacement of more than 80,000 tons, the Fujian is the world's first conventionally powered aircraft carrier to feature electromagnetic catapult technologies, according to CCTV News. The report noted that it will carry a wide variety of carrier-borne...
Chinese President Xi Jinping said Tuesday that China and Central Asian countries have explored and formed the China-Central Asia Spirit, which features mutual respect, mutual trust, mutual benefit, mutual assistance, and the pursuit of common modernization through high-quality development.
Xi made the remarks in his speech at the second China-Central Asia Summit in the Kazakh capital of Astana.
Xi said that the Chinese side has decided to establish three cooperation centers and a trade facilitation platform within the China-Central Asia cooperation mechanism.
When addressing the summit, Xi said these institutions include the China-Central Asia poverty reduction cooperation center, the China-Central Asia education exchange cooperation center, the China-Central Asia desertification control cooperation center, as well as the China-Central Asia trade facilitation cooperation....more below
