FOCUS – While Emmanuel Macron will arrive in Washington this Tuesday evening, Le Figaro comes back to this legislative package of 430 billion dollars.
This is a subject that worries Europe and that Emmanuel Macron intends to discuss with Joe Biden during his state visit, which begins this Tuesday evening. The French president wants to try to convince his counterpart to reconsider the spirit of the Inflation Reduction Act (the IRA), a legislative package of 430 billion dollars voted last August. Joe Biden’s initial objective: to create an electric automobile industry that is as American as possible, to the detriment of Europeans.
The IRA represents a minimal version of the initial plan, “Build Back Better», Rejected by a handful of centrist Democratic senators. All the Republicans had voted against. The text includes dozens of provisions aimed at increasing certain taxes (new minimum corporate tax rate at 15%), creating new tax credits, extending existing tax credits and identifying new expenditures.
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One objective of the law is to improve health insurance coverage for retirees: $98 billion. For the first time, the federal government will be able to negotiate the price of certain drugs covered by its Medicare insurance plan. But most of the cost of this package, 392 billion dollars, concerns aid, subsidies and tax credits to decarbonize the American economy, accelerate the energy transition, stimulate investment in the electric automobile sector, and repatriate supply chains in the United States.
One of the measures notably excludes models from non-American manufacturers from the $7,500 tax credits granted to buyers of electric cars. It is this component that alarms Europeans, Japanese and Koreans. It creates strong incentives to invest in the United States rather than elsewhere, particularly in the electric vehicle industry. The European Union does not have the means to offer so much.
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Emmanuel Macron and the negotiators of the European Union therefore hope to obtain concrete gestures from the Biden Administration on December 5 to eliminate, or postpone, these provisions. On that day, the European Union-United States Trade and Technology Council (CCT) meets, a body which aims to coordinate the trade and industrial policies of the two economic areas. Time is running out: from 1is January 2023, a first tax credit of 3750 dollars must apply to electric cars assembled in Canada, the United States and Mexico.