US treats its friends as it does its rivals

The Inflation Reduction Act of the United States has never ceased being a disturbing factor to other economies since it was approved by the US Congress in August. On Tuesday, after a discussion on the “unfriendly” legislation, as French President Emmanuel Macron has called the act, the 27 European Union finance ministers reached a consensus that the act is a threat to EU companies and economies.

The EU has listed at least nine points in the act that could be in breach of international trade rules. Before that, India, the Republic of Korea and Japan also showed their respective concerns about the act and the design of the financial incentives in the package, a focus of the EU’s worries as well.

According to the act, the US government will provide US companies with a record $369 billion subsidy in various forms to help them cope with pressures from climate change and energy shortage, a main cause driving production costs and inflation in the country. That will unavoidably put their competitors in other countries in a disadvantaged position.

Rubbing salt in the wounds, a considerable part of the money will be coming from the tax the US will start to levy on foreign products and services. For example, while the EU grants electric cars made in North America tax credits, the US is imposing heavy taxes on electric cars made in the EU.

The act has particularly peeved the US’ allies as it effectively treats them the same way the US treats its rivals.

Rather than putting an end to the “America first” practices of the previous administration, the Joe Biden administration has willingly picked up the baton. In doing so, it is triggering a new round of trade frictions among major economies.

What makes it more noxious is that Biden has decided to continue an executive order banning US investing in the Chinese companies that the US has put on its Entity List, a practice the Donald Trump administration initiated citing unfair subsidies to China’s State-owned enterprises and other so-called government interference in the market, which it alleged harmed fair trade.

The hypocrisy of the US government is self-evident and the disregard that it shows to the interests of those it claims to call friends is nothing but contempt.

It should take no more than the Inflation Reduction Act to show the European Union that the conviviality the Biden administration demonstrated to it in its early days was staged solely for the purpose of healing the wounds left by its predecessor, in order to entice the bloc into forming an anti-China clique.

Compared with former president Donald Trump’s lord-of-the-manor boorishness, the Biden administration’s sham bonhomie has been far more damaging to Europe.