Subsidy dispute: USA and EU approach each other

The meeting between EU Commission President von der Leyen and US President Biden did not settle the dispute over US subsidies for green technologies. But both sides took a significant step towards each other.

EU Commission President Ursula von der Leyen seemed satisfied after the meeting with US President Joe Biden. It was a very good, very constructive conversation, said von der Leyen.

Right from the start, sitting next to the US President in the White House, she stressed that the European Union and the US were not just partners, but good friends. And the US President certified that the President of the European Commission was doing a great job.

It’s about minerals for the production of electric car batteries

Kind words to start with. In a one-to-one conversation, Biden and von der Leyen then took a significant step towards each other in the trade conflict surrounding US subsidies for green technologies. The conflict is not off the table, but at least defused. “We intend to start negotiations on an agreement on critical minerals without delay,” said a joint statement by the President of the European Commission and the US. It’s about minerals for the production of electric car batteries.

Ursula von der Leyen explained that the aim is to have an agreement that critical minerals mined or processed in the EU would be treated as if they had been mined in the US in the case of US subsidies.

In other words: no tax disadvantages for European raw materials in the USA. This would de-escalate the trade conflict. Because the EU – and also Germany – fear that European companies will relocate their production, such as that of batteries for electric cars, to the USA if they can only benefit from tax breaks there.

Tax breaks for green technologies in US production

The background is the so-called anti-inflation law of the USA. It provides for billions in investments in climate protection. However, tax breaks for green technologies are linked to the fact that they are manufactured in the USA.

Von der Leyen had already emphasized at the beginning of the meeting that she thinks it’s great that there are now such massive investments in clean technologies. After the meeting, she reiterated that she welcomed the anti-inflation program. It is a massive investment in clean technologies – and the EU is also counting on it with its green industrial program.

US President Biden has already made it clear that nothing will change in the US law to reduce inflation. But when it comes to application, the US can accommodate the EU – and they obviously do. At least Ursula von der Leyen and Joe Biden have now started negotiations with the aim of mitigating negative consequences for the European Union.