West News Wire: According to reports, the leaders of Germany and France have agreed that the EU will have to respond against the United States if it moves forward with planned tax cuts and energy perks intended to incentivize businesses to move production domestically.

The news outlet Politico reported on Thursday that President Emmanuel Macron and Chancellor Olaf Scholz are both worried about the White House’s inflation reduction act, which they both see as “protectionist.”

They apparently talked about the subject the day before over their lunch in Paris. The two leaders agreed that the state subsidy scheme unveiled by the US would constitute unfair competition and should not go unchallenged, the site reported, citing “people acquainted with their discussions.”

Politico noted that their agreement came despite differences of opinion between Scholz and Macron on other major issues, including energy and defense.

To counteract Washington’s plans, Paris and Berlin reportedly agreed to propose similar EU-wide incentive schemes for businesses.

However, if implemented, the measure would risk sparking a trade war between the bloc and the US, the article claimed.

Appearing on the TV channel France 2 on Wednesday night, Macron called for a “Buy European Act like the Americans,” adding that the EU should “reserve [our subsidies] for our European manufacturers.”

“[Scholz and I] have a real convergence to move forward on the topic, we had a very good conversation,” Macron added.

However, the two European powerhouses do not plan to enter confrontation mode just yet, according to Politico, and would prefer to strike a compromise with the US at the negotiating table.

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According to the article, this could be done through the ‘EU-US Taskforce on the Inflation Reduction Act’ that was created on Tuesday during a meeting between European Commission President Ursula von der Leyen and US Deputy National Security Adviser Mike Pyle.

Moreover, an informal meeting of EU trade ministers will be held in Prague next Monday, with US trade envoy Katherine Tai attending the event.


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