EU-US alliance riven with mutual suspicion

Although trying to persuade the United States to have second thoughts before giving a green light to the implementation of its Inflation Reduction Act was an important objective of French President Emmanuel Macron’s state visit to the United States last month, and he was received with high standards, it is clear that the US thinks European interests are expendable.

As the French leader unequivocally expressed when speaking with the US media in Washington after his meeting with his US counterpart, the act is a “killer” of jobs and businesses in Europe, despite it being a promoter of the two in the US. As the US government will, in light of the act, offer subsidies several times higher than those the European Union countries are allowed to give to enterprises in green industries, that will arguably reshape the future of the industrial and economic landscape across the Atlantic.

It is predictable that companies, investment, talents and technologies will be attracted to the US from Europe in a short time if the EU side cannot remove the cap on its green industry subsidies, which is fixed at a rational level to promote healthy market competition and prevent the government from interfering too much in market activities.

However, the Inflation Reduction Act will make the playground immediately lopsided by breaking the basic rules of the market. Its contribution to the US’ national interests comes at the cost of other players. As Macron warned, the act will prompt more EU countries to do the same — they would have no choice if the US sticks to the act — to protect their own interests, and that will shake the foundation of the free trade and market competition.

The irony is what the US is trying to do — offering excessive state subsidies to market entities — is exactly what it falsely accuses China and some EU countries of doing.

No wonder Macron questioned the nature of the alliance between the US and the EU, which it seems is being hollowed out by such US-first practices as the act and the US’ exploiting of the EU’s energy crisis to turn a profit.

Those America-first-minded politicians in Washington should realize that if the US goes too far in fleecing the EU, it will only be a matter of time for the foundation of their so-called value-based alliance to be shaken, as the Ukraine crisis, which the US is prolonging for its own narrow ends, has already served to show how fractured the alliance is, and the depth of their mutual suspicion.