U.S. companies are trying to lure European businesses to America to benefit from recent climate-related subsidies.
- Taking advantage of the subsidies in the Inflation Reduction Act, several U.S. state governments—including Michigan, Ohio, and Georgia—have begun sending delegations to European companies to draw business from across the ocean, the Financial Times reports.
- The continued attempts by these delegations to draw the attention of European businesses are re-igniting concerns of a climate trade war between the European Union and the U.S.
- The EU is attempting to catch up with the creation of the European Sovereignty Fund, which hasn’t been signed into law yet.
Why It’s Important
The Inflation Reduction Act was signed into law by President Joe Biden on August 16 and provides $369 billion in subsidies for climate-change technologies.
Tensions between the U.S. and the EU have been high for months as a result. As we previously reported, discussions became problematic as early as September when the Inflation Reduction Act’s rules about domestic electric-vehicle production, with subsidies limited to domestic production as a boost to U.S. automotive businesses. The EU is rushing to create its own climate subsidies, but it is already playing catch up.
The interest for American businesses is already paying off. JobsOhio director of international business Justin Kocher tells FT that state officials have already met with companies in Germany, Italy, and Belgium that want to do business in his state. “I don’t think we’ve actively recruited companies as intensely as we are now.”
EU officials like the European trade commissioner Valdis Dombrovskis have accused the U.S. of allowing its subsidies to break down relationships between the U.S. and Europe and that facing climate change should be done through “building transatlantic value chains.”
“I have been astonished by the many activities from state governments, from business development agencies, state-owned business development agencies, which have been trying hard to lure us in. If the EU does not come up with something similar [to the IRA] then we may continue growing outside, in the US in particular, as opposed to continuing to invest in Europe,” says Meyer Burger CEO Gunter Erfurt.