Why the U.S. Inflation Reduction Act is causing such a stir in Europe - Capital Street FX
French President Emmanuel Macron will use a state visit to Washington this week to press European Union concerns about the United States’ huge new green energy subsidy package. While EU countries welcome the new commitment to the energy transition, they fear the $430 billion Inflation Reduction Act will put their companies at an unfair disadvantage. WHY IS EUROPE ANGRY? EU countries are worried their companies will suffer because of U.S. tax breaks for components used in renewable energy technologies like electric cars on condition they are made in North America. EU countries consider that 200 billion euros ($207 billion) out of the total is tied to locally produced content provisions that potentially violate World Trade Organization (WTO) rules. French Finance Minister Bruno Le Maire says that while subsidies to foster energy transition are fair game, they should comply with WTO rules and there should be a level playing field. Not only do the tax breaks put European companies at...