President Joe Biden’s $370 billion plan to support businesses leading the transition to a low-carbon economy has riled some of America’s largest trading partners, who say the measures unfairly benefit US companies and harm free trade. Now the European Union is striking back with state support for industries that could generate as much as $1 trillion in green investments by 2030. Asian allies are following suit. It’s starting to look like the kind of global subsidy war that tends to benefit wealthy nations at everyone else’s expense.
The US Inflation Reduction Act offers tax credits and other incentives for the production of electric vehicles, renewable energy, sustainable aviation fuel and hydrogen. Solar and other green industries are creating thousands of US jobs as the economy recovers from the pandemic, and a solid economy would help Biden if he seeks reelection in 2024. Policymakers in Europe, Japan and South Korea worry that the law could lure investment to the US that might otherwise flow to their regions. German carmaker Volkswagen AG, for example, opted in March to build a $2 billion factory for its new electric Scout brand in South Carolina and picked a site in Canada for its first battery plant outside of Europe, describing the incentives on offer as akin to “a gold rush.”
ncG1vNJzZmivp6x7o7jOqKSbnaKce6S7zGilnq%2BjZK6zwMico56rX2d9c3%2BMaWhmaWhkxKnFjJ6sZqeSn7KkwNJmq6hlpah6qL7EnqVmq6WXwKqwyJ6qZqyRrXqjvsSaoqxloaq2pLfTmqKe