Hurt by skyrocketing energy bills, European industry has also been weakened by Joe Biden’s “Low Inflation Act,” which provides heavy “Made in America” ​​subsidies, especially in the electric vehicle sector. During a state visit to the United States starting on Wednesday, Emmanuel Macron will ask his American counterpart to make a gesture in a situation where the Old Continent is threatened with deindustrialization.

Negotiations, not a trade war. It’s in that spirit that Emmanuel Macron will arrive in the United States on Tuesday, ahead of the French president’s second unprecedented state visit, amid rising tensions between Europeans and Americans over the “Deflation Act”. ” (IRA), entered into force in August, – reports France 24, taken over by Rador.

The largest investment ever decided to combat climate change, the IRA includes a $370 billion bond, some of which will be used to build wind turbines, solar panels, microprocessors or electric cars.

The emblematic measure of this colossal plan, desired by Joe Biden, but also the most controversial: a generous tax credit of up to $7,500 reserved for the purchase of an electric car built in an American factory and equipped locally. battery. What can accelerate the introduction of sustainable industries in America and seriously compete with China, which is a leader in this field.

But these large subsidies also drive European companies out of the U.S. market, preferring Elon Musk’s Tesla cars to Germany’s BMW or France’s Renault. “I believe that this does not correspond to the rules of the World Trade Organization and does not correspond to friendship,” suggested Emmanuel Macron in early November after a meeting with representatives of 50 French industrial enterprises.

Estimated loss of “10,000 potentially newly created jobs” in France.

With the threat of recession, Europeans are increasingly concerned about this topic in a situation where companies from the Old Continent have already suffered a huge competitive shock compared to their competitors on the other side of the Atlantic, who are much more exposed to the explosion of electricity bills since the beginning of the conflict in Ukraine.

Energy independent thanks to the development of shale gas and oil, the United States will benefit from lower and more stable prices. A situation that could usher in a new era of deindustrialization in Europe, favoring Washington, according to some economists.

“This is a matter of important concern that we will raise at the European level,” said Elizabeth Bourne in an interview with the newspaper Les Echos. The US investment plan, which risks creating important distortions of competition, could cost France “10 billion euros in investment” and “the creation of 10,000 potential jobs,” according to the prime minister.

In the face of American protectionism, the EU is considering several avenues, such as adopting trade countermeasures or creating a “Buy European Act” designed as a direct response to Joe Biden’s plan to protect European green industries.

However, at this stage, the option of rushing for subsidies is excluded. “We have to be very careful about subsidies to avoid a trade conflict,” Josef Sikela, industry and trade minister of the Czech Republic, which holds the European Union presidency until the end of December, said on Friday.

“The challenge is to see if Europe really has the room to maneuver to counter these provisions. We could introduce the same protection on a European scale, but we know that this low level is a loss for everyone,” said economist Stéphanie Ville from PwC France.

Exceptions for European companies?

To avoid a new trade war between Europe and the United States, similar to the one in the Trump era over aluminum, Emmanuel Macron will try to convince Joe Biden that it is in his interest not to weaken the Old Continent.

The “submission” would be to say: obviously there is a Chinese challenge. We in the EU are ready to stop being naive about Beijing. But you cannot ask us to help you with China and impose the IRA on us,” a French diplomat told Reuters on condition of anonymity.

Aware that Joe Biden will not back down from this plan, which is crucial for his balance sheet, the French president will try to force his colleague to agree to some amendments. The goal: negotiate exemptions for European companies, especially electric car makers, along the lines of those already granted by Mexico and Canada.

But, according to Stephanie Villers, it is unlikely that the American administration will accept the demands of “its oldest ally.” “We have to understand that this is not in the spirit of the United States, which has always supported its trade and economy at the expense of other states,” says the economist.

Last month, the Europeans and the Americans set up a “task force” to ease tensions, which is due to meet on December 5. If the negotiations fail, the IRA would become a serious obstacle between Brussels and Washington. The European Commission could even notify the World Trade Organization (WTO). But this process will last at least a year, writes the Financial Times. On the other hand, it is far from unanimity on the 27th, when Westerners want to maintain a united front before Moscow and the consequences of the Russian invasion of Ukraine.