"Signed into law on 16th August 2022, the Inflation Reduction Act is a $430 billion package of federal spending, tax breaks, credits, and levies, aimed at fighting climate change, reducing healthcare costs, and making large corporations pay their “fair share” in taxes. Besides its goal of bringing down inflation, the Act is the biggest climate action package in U.S. which combines climate action goals with industrial policy, aiming to transition to clean energy.Its provisions entail that only passenger EVs assembled in North America and critical materials extracted, processed and recycled in North America, are eligible for a tax credit incentive, thus incentivizing local manufacturing of renewable energy components.
EU is concerned about the IRA’s possibly “discriminatory” provisions and fear that the IRA provisions for green product makers in North America and free-trade partner countries put European companies at a disadvantage and may push them to move critical parts of their supply chains to America. French President Macron has attempted to revive calls for a “buy European act”, which could make government procurement and subsidies contingent on manufacturing on the continent.
The EU’s Competition Commissioner Margrethe Vestager, while acknowledging potential damage for European businesses, has cautioned against it amid already fragile global geopolitical conditions.
However, response from U.S.A. has been dismal as Biden has made it clear that America might be open ""tweaks"" here and there in the Act but made it clear that “US makes no apology” for promoting American manufacturing and would continue to create jobs for its people."