EU Warns U.S. Electric-Vehicle Subsidies May Inflame Tensions



Jenny Leonard and Jorge Valero | Bloomberg

The European Union warned U.S. congressional leaders and members of President Joe Biden’s administration that the aggressive use of electric-vehicle credits in the pending Build Back Better Act could run afoul of international trade rules and create “friction” in the transatlantic relationship. 

The EU’s trade chief, Valdis Dombrovskis, sent a letter dated Dec. 3 to officials including Senate Majority Leader Charles Schumer and Minority Leader Mitch McConnell saying that the government subsidies would discriminate against European car manufacturers, according to a copy of the letter seen by Bloomberg. 

The American plan would offer an additional $4,500 in tax credits to consumers who buy cars made by U.S. manufacturers with union-represented workers, beyond an initial $7,500 that at first will apply to vehicles regardless of where they are made and five years later will apply only to those made in the U.S. Canada has spoken out against the subsidies and Mexico has threatened to retaliate. 

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