Since Biden officially signed the "Inflation Reduction Act", economic and trade relations between the United States and Europe have become suddenly tense, because this bill grants the United States the ability to directly provide government cash subsidies to enterprises that produce and operate in their own country. This is undoubtedly a way to cut off the burden for Europe under the pressure of energy crisis and exchange rate . Previously, the leaders of France and Germany reached a preliminary consensus to work together to deal with the unfair subsidies of the US government. Now the economic ministers of France and Germany are working to formulate more specific response policies.
According to the report released by the " Global Times ", citing Reuters and other foreign media, French Economic Minister Le Maire threatened that Europe must take all measures to defend its economy, such as enacting a bill to buy European goods to fight against the United States' subsidy bill. In fact, judging from the scale of outflow of European industrial capital and financial capital, whether it is the energy crisis brought about by the Russian-Ukrainian conflict or the financial pressure caused by the US dollar interest rate hike, it is accelerating the decline of European manufacturing, making Europe, which is eager for economic recovery, unable to bear the burden.
Scholtz and Macron
And the US "Inflation Reduction Act" is undoubtedly the last straw that crushes the "U.S. and Europe's unity". On the surface, the United States is trying to reflow some manufacturing industries in the name of "confronting China", but in fact, the Biden administration's subsidy bill covers the whole world. Although China is the world's largest single consumer market, the United States also has strong consumption power that cannot be ignored. Now, the global economy of is very serious. International manufacturers are racking their brains to save themselves. European companies have to increase their investment in the United States to diversify risks due to the deterioration of their operating environment.
This will inevitably touch the core interests of EU main economy . Therefore, France and Germany took the initiative to show their position and would never compromise and concessions to the US government subsidies. This disguised "declaration of war" also previews that a large-scale trade war around the United States and Europe is slowly beginning. However, although China is "being shot" in this internal trade war in the West, we must still be wary of the impact this matter has on us.
German Economy Minister Habek and French Economy Minister Bruno Lemaire
Europe seems to be trying to counter US subsidies, but in fact the approach they plan to take is not essentially different from that of the United States, which will bring a very serious consequence, that is, the speed of "anti-globalization" has been greatly accelerated in this subsidy war.
Due to the economic size of the United States and Europe, they are able to withstand the impact of the subsidy war and have enough "ammunition" to engage in this war without gunpowder. But for many developing countries, especially some small countries whose manufacturing industries have just improved, the impact of the "coin-spreading war" between the world's major economies is unimaginable. What's more fatal is that due to the interference of the United States, its arbitration institution is already in a substantial semi-paralyzing state. When multilateral ism cannot properly handle international trade disputes, absolute power becomes the only measure of "justice". Our country's "Belt and Road" initiative focuses on developing countries that have potential but still need time to develop. Once they are involved, it will inevitably add unnecessary obstacles to our global strategy.
The United States and Europe may break out in a trade war
In fact, in the face of the sharp opposite between the United States and Europe, even developed economies like Japan and South Korea cannot guarantee that they can survive alone. Therefore, the real harm of this trade war is not so much that the Western economic order is in chaos, but rather that the global economy is entering the "battle royale mode." The EU must realize that if it does not want to be the "leek under the sickle" of the United States, the best solution is to cooperate comprehensively with China and maintain the Asian and European markets, which in turn puts pressure on the United States. Only in this way can the international trade order be avoided from being hit by more devastating blows.
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