The EU is threatening to pull out the big guns if Washington doesn’t change its new tax credits for electric vehicles, which will incentivize U.S. consumers to “Buy American” when it comes to getting a greener car.
“This has the potential of becoming a new Airbus-Boeing,” said one EU trade diplomat, referring to the 17-year-long transatlantic trade war over subsidies for the plane makers Airbus and Boeing.
The European Commission slammed the U.S. measure as a “new and significant transatlantic trade barrier by the U.S." A European Commission spokesperson said the EU will consider all options, including bringing a case against the U.S. to the World Trade Organization.
The EU warned such tax credits shouldn’t distinguish between foreign and domestic car manufacturers. The European Commission called the bill “discriminatory,” in violation of WTO rules and said they risked undermining shared EU-U.S. climate ambitions. Brussels is now looking into whether to follow South Korea’s lead and start a case at the World Trade Organization, although EU trade diplomats still have to discuss how to handle the new trade irritant.
It would seem the EU views the new US EV tax credit provisions as protectionism.