General

According to the Huacheng Import and Export Data Observation, recently, the European Union said that it had set up a task force and issued a written warning to the United States that it would consider taking retaliatory measures because the US government's Inflation Reduction Act had damaged the level playing field between the United States and Europe. According to the analysis, under the influence of the Russian Ukrainian crisis, the United States announced a series of stimulus measures, including the Inflation Reduction Act, in an attempt to strengthen its own energy price stability, reliable corporate policies, and green transformation support, which is tantamount to "pouring oil on the fire" to the European industry and manufacturing crisis.

Criticize the United States for ignoring its allies' concerns

Huacheng Import and Export Data Observation reported that on November 7 local time, EU finance ministers held a meeting in Brussels. Finance ministers said that the United States ignored the EU's concerns about its Inflation Reduction Act, making it possible for the EU to take corresponding retaliatory measures.

At the meeting, the finance ministers of France and Germany strongly criticized the policy of the US government to vigorously subsidize the local electric vehicle industry. Bruno Le Maire, French Minister of Economy and Finance, said that the US Inflation Reduction Act may "endanger the fair competition environment between European and American enterprises" and is causing "serious concern of the French government". He believed that Europe should make a "coordinated, unified and strong" response to the legislative act of the United States.

Christian Lindner, the German Finance Minister, warned that the United States was completely unaware of the concerns of the European Union. The United States government must know that this bill will bring serious consequences to the market. Both sides should try their best to avoid the situation of "a tooth for a tooth" or even a trade war.

Earlier, French President Makron and German Prime Minister Schultz were worried about the US Inflation Reduction Act introduced in August this year when they held talks in Paris on October 26 local time. Schultz also issued a stern warning that the US approach may lead to "a huge tariff war". At the same time, Makron also said that this bill "implements trade protectionism policy", and may consider trade retaliation against the United States next.

At the end of last month, the informal meeting of EU trade ministers was held in the Czech Republic. On the same day, the Executive Vice Chairman of the European Commission Dombrovskis, the Czech Minister of Industry and Trade Sikla and others expressed their concerns about the US Inflation Reduction Act. The EU side said that if the United States continues to promote this bill, the EU will not sit idly by and will consider providing subsidies to European enterprises through the development of similar incentive plans in the future.

Thierry Breton, member of the European Commission in charge of the internal market, said that the United States' behavior violated the principles of the World Trade Organization. If the United States did not consider the ideas of its European partners, the European Union would take "retaliatory measures" and submit the dispute to the WTO for resolution.

European manufacturing industry faces difficulties

Since the outbreak of the Russian Ukrainian conflict, European energy supply has been tight and prices have continued to soar. Some economists warn that sharp fluctuations in European energy prices and tight supply chains may lead to Europe's "de industrialization". According to American media reports, European enterprises are transferring production to the United States, attracted by stable energy prices and government support in the United States, which has aroused strong dissatisfaction in the European Union.

According to the Huacheng Import and Export Data Observation Report, German BMW announced on October 19 that it would invest 1.7 billion dollars to produce electric vehicles in the United States; On October 26, BASF, a German chemical giant, announced that it planned to reduce its jobs and business activities in Germany in view of the high natural gas prices in Europe and stricter regulation.

At the same time, the US government also released a series of measures to stimulate the development of manufacturing and green energy industries. Many enterprise executives said that the momentum of industrial competition between the United States and Europe is biased towards the United States. The safe and stable energy supply is especially true for enterprises investing in manufacturing projects of energy intensive products such as chemicals and batteries.

In addition, Europe is also dissatisfied with the United States in terms of the huge profits in energy business. Recently, an official of the European Commission said that the current price of LNG imported from the United States by the European Union is four times the domestic price of the United States, which is "abnormal".

Due to the natural gas crisis in Europe and soaring natural gas prices, a large amount of natural gas in the United States is flowing to Europe. Some EU member states complain that Russia's natural gas supply to Europe has decreased significantly after the EU and the United States imposed sanctions on Russia, leading to an energy shortage crisis in Europe, while the United States took the opportunity to sell American LNG to Europe at high prices.

In the second and third quarters of this year, the total net profits of listed oil and gas companies operating in the United States reached as high as US $200.24 billion (about RMB 1450 billion), which was the most profitable six months for the US oil and gas industry since records began. Among them, the profit of LNG operators in the United States is expected to reach US $59 billion this year, more than doubling year on year, Huacheng Import and Export Data Observation reported.

In response, EU leaders said that they would discuss the issue of high price natural gas in the near future and plan to adjust the joint gas purchase procedure before the end of November.

Or trigger a new round of trade war

The EU energy crisis is getting worse, but the United States has raised the price of energy exports to Europe, which has made France and other countries quite dissatisfied. In addition, as a downstream industry of energy, many European industrial enterprises have reduced or stopped production, while the United States has used its energy price advantage and government subsidies to attract European industrial enterprises to invest in the United States, which makes the EU more angry. As a result, the Inflation Reduction Act may bring new variables to the US EU trade relations.

Experts pointed out that if the EU takes retaliatory measures, it is likely to lead to a new round of transatlantic trade war. To this end, US and European officials are preparing to hold a special group meeting in the near future to address Europe's dissatisfaction with the Inflation Reduction Act. However, despite the fact that the EU and the United States have set up a special group for many days of negotiations, the two sides have not yet reached consensus on the contradictions caused by this bill.

The US Inflation Reduction Act officially came into force on August 17 this year, which includes about 430 billion US dollars (about 3100 billion yuan) in the next 10 years to combat climate change, develop clean energy and strengthen medical security. Some provisions involve the US government providing high subsidies for the local electric vehicle industry, and excluding imported electric vehicles from the subsidy list.

In fact, because the economic situation in many countries is not optimistic, the US Inflation Reduction Act has caused a lot of dissatisfaction internationally. In addition to Europe, Japan and South Korea, which have invested heavily in the field of electric vehicle batteries in the United States, have responded particularly strongly, warning against the US Inflation Reduction Act.

According to the Huacheng Import and Export Data Observation Report, the Japanese government warned on November 5 that the preferential tax policies for electric vehicles in the US Inflation Reduction Act may eventually hinder Japanese enterprises from further investing in the US and affect the employment environment in the US. At the same time, the Japanese electric vehicle enterprises are now in a deep inflation dilemma. After the implementation of the Inflation Reduction Act, the cost of manufacturing and exporting electric vehicles will rise, and the enterprises will face a double blow. To this end, the Japanese cabinet will introduce a large-scale economic stimulus program to mitigate the impact of inflation on individuals and enterprises.

International public opinion believes that the United States needs to come up with a way to accommodate the concerns of the EU and other countries at the level of specific rules to avoid a huge trade war.