Valdis Dombrovskis, EU trade commissioner, has warned that massive US green subsidies could backfire as they bring European companies closer to China.

Dombrovskis said that while the $369 billion U.S. “Inflation Reduction Act” was in part a US attempt to reduce its reliance on China, it could have the opposite effect in Europe, making Beijing’s “initiatives and proposals” more attractive.

This, he added, “might work against the stated purpose of the Inflation Reduction Act.”

Dombrovskis told the Financial Times on Thursday ahead of Washington’s leadership suggesting that European companies could benefit from a “net” tax credit on commercial vehicles – a move Brussels sees as a welcome first step, but one that doesn’t remove all of its fears.

A law passed by the administration of US President Joe Biden last August provides for hundreds of billions of dollars in subsidies and tax breaks for green technologies, including batteries and hydrogen, to increase US investment in such industries while reducing America’s dependence on China. . products and knowledge.

The European Commission has warned that the law discriminates against EU-based companies and threatens the bloc’s industrial base.

The European Union has formed a joint working group with the White House to try to resolve the dispute. Dombrovskis said that while there are signs of positive action by the Biden administration in key sectors related to electric vehicles and batteries, this will only mitigate some problems, not solve them all.

Source: Financial Times.

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Robin Jackson is the editor-in-chief at 24PalNews. As an editor and author who covers business and finance, Robin shares the latest business news, trends, and insights with his extensive audience.

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