Biden admits legislation's 'glitches' as Macron tries to de-escalate US-EU trade tensions

Fri 2 Dec 2022
Posted by: Phillip Adnett
Trade News

UK EU trade - Macron responds to Inflation Reduction Act

US president Joe Biden and French president Emmanuel Macron have sought to heal rifts in the trans-Atlantic trade relationship over a controversial piece of American legislation that critics feared could harm EU industry.

In recent weeks, there has been rising concern in European circles over the Inflation Reduction Act (IRA) – signed into law by Biden – which gives tax breaks for components produced in North America, particularly products associated with sustainable technology, such as electric vehicles.

As reported previously by the IOE&IT Daily Update, Brussels had previously asked the US to treat EU imports of these products the same as those from Canada and Mexico, amid fears these measures could damage European industry and that the legislation was protectionist.


At a televised press conference in the White House, Biden admitted that there were “glitches” in the legislation and there was a need to “reconcile changes” in the IRA.

“There’s tweaks we can make that can fundamentally make it easier for European countries to participate or be on their own.”

“It was never intended to exclude folks who are cooperating with us.”

He stated that the aim was to rebuild and reinforce the US’ supply chain after the dual crises of the pandemic and war in Ukraine.

Macron’s efforts

Macron arrived in Washington on Wednesday (30 November) as part of a state visit, with Politico reporting that the visit was seen as a ‘last ditch’ effort to reduce trade tensions.

The French president described the IRA as “super aggressive” in a closed door meeting with American lawmakers, according to France 24.

At the press conference, Macron said: “We had a very good discussion on the IRA and we decided to synchronize our approaches ... as well as our investments, because we share the same strong will to secure our industries.”

“We want to succeed together, not against each other.”

Domestic politics

How the legislation is to be changed is unclear, since from the New Year on, Biden will preside over a divided US Congress.

The opposition Republican Party seized control of the House of Representatives in last month’s midterm elections and could clog up much of the president’s agenda, although the Senate still remains under Democratic control

US Senator Chris Coons, a close Biden ally, told Reuters: “Exactly what that mechanism could be, whether there is an executive path through regulation, whether the way the IRA is implemented or if it's going to require legislative action is not exactly clear to me.”

“There are several options that I am discussing with colleagues, but it's not something that we are going to do this week.”