We are heading to a a new trade conflict between the USA and Europe ? This time it is not about cheese, wine or airplanes, as was the case between the two economic powers in 2020 during the presidency of Donald Trump with the episode of “punitive” tariffs. This time about cars, or more precisely about electric cars. Our colleagues from Figaro indicate the future reforms desired by the Biden administration infuriates Europeans due to deliveries of electric cars.

The United States wants to favor American electric cars

At the center of tensions between the European Union and the United States, tax credit amendment coined by Washington. This amendment provides, in particular, a discount $7,500 to buy an electric car, made on American soil. The text details that the ores and lithium for the batteries must come from the United States. The Biden administration wants to implement it amendment from January 2023. Thus, it will push the American electric car market a little more.

Europe, for its part, considers this amendment a “discriminatory measure for European producers”. European countries are particularly concerned about the possibility of access of producers from the Old Continent to the American market. For example, the excellent financial results of the Stellantis group were contributed by the American market with a very strong growth of 18%.

America has once again become the Eldorado of European manufacturers, as only the North American market is represented 20% of car exports in Europe. Therefore, the introduction of this amendment at the beginning of 2023 may weaken the exports of European manufacturers. That is why the European Commission is considering the possibility of referring this issue to the WTO, if this amendment sees the light of day. We also learn from our colleagues from Figaro that South Korea (also concerned by manufacturers Hyundai, Kia and Daiwoo) is thinking of supporting Europe in its approach.

The Americans were not convinced either

On the other side of the Atlantic, the implementation of this amendment is also hotly debated. The Biden administration is eager increase sales of electric vehicles in the US. The latter have accumulated many delays from their Asian and European competitors. Joe Biden is hoping, above all, for promotion fleet transition is still very combustion oriented. The amendment would allow manufacturers like Ford to offer electric solutions to customers with popular vehicles like the F-150 Lightning pickup.

But observers of the American market note that the implementation of this amendment may actually further weaken the American automobile industry. Because according to the given figures, 70% of electric models sold in the US will not be entitled to this tax benefit. Another source of disagreement is the reduction of commercial supply. American consumers may be deprived of access to foreign electric vehicles, particularly those from Asia, which are very popular with American customers.

If the contours of the implementation of this amendment are not yet fully defined, Europe and the United States ensure that they are having discussions on this issue. The European camp hopes to find a political solution before the next G20, which will be held next November in Indonesia.