Biden Administration Will Address Europe’s Worries About Inflation Reduction Act: White House

White House press secretary Karine Jean-Pierre speaks during a daily press briefing in the James S. Brady Press Briefing Room at the White House in Washington on Nov. 2, 2022. (Oliver Contreras/Getty Images)

The Biden administration is looking to address concerns about the Inflation Reduction Act (IRA) raised by European nations worried about its impact on investment in their region.

In a Dec. 5 press briefing, a reporter asked White House press secretary Karine Jean-Pierre about her earlier comments about the administration having no plans of approaching Congress for making legislative changes to the IRA for Europe. Some French officials had suggested that Biden could use executive orders to make tweaks to the IRA.

Jean-Pierre answered that Washington is working through a “substantive consultation” with Europe. “We’re going to have those conversations and find ways to, again, address their concerns,” she said while confirming that the administration will not approach Congress.

European industry sees the IRA as a threat because the bill offers tax credits for components manufactured in the United States, a move which has the potential to take away investment from the bloc.

The IRA subsidies come at a time when Europe is struggling with high energy prices and staring at a potential recession in 2023. The act offers a 30 percent tax credit on the cost of upgraded or new factories in America that seek to manufacture components related to renewable energy.

In a joint press conference with French President Emmanuel Macron, Biden said the United States makes “no apologies” for the $740 billion IRA but recognized the European Union’s concerns.

“There are occasions when you write a massive piece of legislation, there’s obviously going to be glitches in it, and the need to reconcile changes,” he said.

EU Concerns

Thierry Breton, the EU commissioner for the internal market, had recently stated that through IRA investment incentives, the United States was triggering a “subsidy race,” according to Reuters.

German Economy Minister Robert Habeck said during a conference that Germany was in talks with American officials to ensure “we do not start a kind of trade war for now.”

A significant factor in Europe’s ire toward the IRA is a proposal that electric vehicles in the United States will qualify for a $7,500 tax credit only if their final assembly is done in North America, Politico reported. This has essentially disqualified several European vehicle models for such credits when they were qualified earlier.

Macron is calling for the EU to move ahead with its own green subsidy package under the “Buy European” push.

In a recent speech at the College of Europe in Belgium, European Commission President Ursula von der Leyen said the EU must take action to “rebalance the playing field” where the IRA and other similar measures create a distortion, according to Euro News.

“In other words: we need to do our homework here in Europe and at the same time, we have to work with the United States to mitigate competitive disadvantages,” she said.