by Mish Shedlock, Mish Talk:
The Climate Trade War
The Wall Street Journal comments Biden Starts a Climate Trade War
Wasn’t President Biden going to end Donald Trump’s destructive trade wars against allies? Apparently not. His “super aggressive” climate protectionism—to quote French President Emmanuel Macron—is infuriating U.S. friends and may set off a subsidy and tariff war.
TRUTH LIVES on at https://sgtreport.tv/
U.S. allies are upset about the Inflation Reduction Act’s generous subsidies for domestically manufactured green technologies. In his trip to Washington last week, Mr. Macron said the U.S. subsidies may “perhaps fix your issue but you will increase my problem.” They’re really a problem for everybody.
The dispute involves tax credits for electric-vehicle and battery production. The IRA’s $7,500 consumer tax credit are restricted to EVs assembled in North America. Most foreign auto makers make EVs abroad and export them because the global and U.S. markets are still small.
The law also offers generous tax credits for domestic EV battery production, including a $35 per kilowatt-hour credit for U.S.-made battery cells, plus $10 per kilowatt-hour for domestically produced modules. These credits are expected to shave the cost of producing an EV battery by 30% to 40% and reportedly prompted Tesla to reconsider plans to make battery cells in Germany.
A Toyota spokesman in Canada spoke the truth: “While the IRA is being presented in many quarters as key legislation to fight climate change, in reality it is an act of trade protectionism.” The Canadian Steel Producers Association has warned that U.S. steel producers would also indirectly benefit from the climate subsidies without incurring carbon costs.
