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The US anti-inflationary act could harm several sectors of the EU economy


February, 24 2023
watermark Economic news

The Executive Vice-President of the European Commission, Margrethe Vestager, said that the US anti-inflation act, which provides subsidies to a number of sectors of the American economy, including those related to so-called «clean» energy, poses a threat to the competitiveness of several industries in the EU.


An analysis of these subsidies shows that some European companies may be interested in investing in the United States, rather than in their home continent. And industries such as the production of wind turbines and batteries for electric vehicles, the extraction and processing of raw materials used to produce these products can be attracted to the States thanks to subsidies.


In addition, the United States may slow down the development of «green» industries in Europe, creating the risk that some investments will eventually not be implemented.


Recall that the inflation act was signed by US President Joe Biden back in August 2022. The document also provides for the expansion of tax subsidies for the purchase of electric vehicles that are assembled in North America and use locally manufactured batteries made in the USA. The act also includes the allocation of $370 billion for «clean» energy and achieving climate goals, and $64 billion for reducing the cost of medicines and health insurance.


The Act is intended to increase US investment in these sectors. At the same time, the European Commission claims that the act discriminates against companies from the EU and threatens the industrial base of the union. The EU is currently negotiating this document with the United States.


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Foreign exchange trading carries a high risk of losing money due to leverage and may not be suitable for all investors. Before deciding to invest your money, you should carefully consider all the features associated with Forex, as well as your investment objectives, level of experience, and risk tolerance.