Europe and the United States seem to be increasingly at war. According to CCTV reports, the EU said on November 7 local time that because the US government's "inflation reduction Act" undermines the "fair competition" environment between Europe and the United States, the EU has set up a special task force and issued a written warning to the US side that it will consider retaliatory measures. Earlier, German Chancellor Olaf Scholz issued a stern warning: the US approach may trigger a "tariff war".
Europe also has a lot to complain about in the lucrative business of energy. Recently, European Commission officials said that the current price of EU imports of liquefied natural gas from the United States is four times the domestic price of the United States, which is "abnormal", EU leaders will discuss the high price of natural gas in the near future, to adjust the joint gas purchase procedure by the end of November.
In addition, the Japanese government proposed an economic stimulus package also attracted market attention. On November 8, Japan's cabinet approved an additional budget of up to 29.1 trillion yen (about 1.4 trillion yuan) to fund the economic stimulus package and ease the impact of inflation on individuals and businesses. Japanese media said that such a large-scale economic stimulus package is rare.
On November 8, according to CCTV reports, the European Union said on November 7 local time that because the US government's "Inflation reduction Act" undermines the "fair competition" environment between Europe and the United States, the EU has set up a special task force and issued a written warning to the United States that it will consider taking retaliatory measures.
Reported that the European Commission in charge of the internal market commissioner Breton warned that the bill plans to provide large subsidies to companies in the United States, will attract companies from Europe to relocate to the United States, which violates the rules of fair competition, if the United States does not amend this part of the content, the EU will resort to the WTO, and will consider retaliatory measures.
The "Inflation Reduction Act" is a stimulus bill signed by US President Joe Biden in August this year, which includes that the United States will invest about $430 billion in the next 10 years to deal with climate change, develop clean energy and strengthen health care, and part of the provisions involve the US government to provide high subsidies for the local electric vehicle industry. It also excluded imported electric vehicles from the subsidy list.
On November 7, local time, the finance ministers of the eurozone countries held a meeting in Brussels, and the finance ministers of France and Germany lashed out at the US government's policy of heavily subsidizing the local electric vehicle industry.
Bruno Le Maire, France's minister of Economy, Finance, Industry and digital sovereignty, said the US Inflation-reduction Act could "jeopardise the level playing field between European and US companies" and was causing "serious concern for the French government".
The German government, a big car country, is particularly unhappy with the law. The country's finance minister, Christian Lindner, warned that the United States was completely unaware of the EU's concerns, and that the U.S. government must know that the bill will have serious consequences for a market, and that both sides should try to avoid a situation of "tit-for-tat" or even a trade war.
Earlier, German Chancellor Olaf Scholz issued a stern warning: the United States may trigger a "tariff war." At the same time, French President Emmanuel Macron also said that the bill "implements trade protectionist policies" and may consider trade retaliation against the United States next.
The reason why European governments are so nervous is that the European manufacturing industry is facing great difficulties.
Since the outbreak of the conflict between Russia and Ukraine, Europe's energy supply has been tight and prices have continued to soar, and some economists have warned that Europe's volatile energy prices and tight supply chains could lead to the start of "deindustrialization" in Europe. According to US media reports, some European manufacturing giants are moving production lines to the United States.
In October, Germany's BMW announced it would invest $1.7 billion to build electric vehicles in the United States. Chemical giant BASF also said it would cut jobs and business activity in Germany because of high energy prices in Europe. Some European executives pointed out that the momentum of industrial competition between the United States and Europe is shifting in favor of the United States, and a secure and stable energy supply is particularly important for companies investing in energy-intensive projects such as chemicals and batteries.
In addition to Europe, Japan and South Korea have also issued warnings against the U.S. Inflation Reduction Act. According to Reuters, the Japanese government warned on November 5 that tax incentives for electric vehicles in the U.S. Inflation Reduction Act could eventually deter further Japanese investment in the United States and affect the U.S. job environment.
Eu: This is not normal!
Europe also has a lot to complain about in the lucrative business of energy.
On November 8, according to CCTV financial reports, recently, European Commission officials said that the current EU import price of liquefied natural gas from the United States is four times the domestic price of the United States, which is "abnormal", EU leaders will discuss the issue of high natural gas in the near future, and plan to adjust the joint gas purchase procedure before the end of November to curb the rise in natural gas prices.
According to reports, the EU leaders called for accelerating the EU's negotiations with energy producers such as Norway and the United States. Some EU member states have complained that after the EU and the United States jointly imposed sanctions on Russia, Russia's natural gas supply to Europe has been sharply reduced, resulting in an energy shortage crisis in Europe, and the United States has taken the opportunity to sell US-produced liquefied natural gas to Europe at a high price.
U.S. natural gas is flowing to Europe because of the region's gas crisis and soaring gas prices. Earlier this year, the United States had agreed to supply 15 billion cubic meters of LNG to the European Union.
Such a great opportunity to make money has made the profitability of the US energy giants record. Publicly traded oil and gas companies operating in the United States earned a combined $20.24 billion in net income in the second and third quarters of this year, the industry's most profitable six months on record, according to data from S&P Global Commodity Insights. Among them, US LNG operators are expected to earn $59 billion this year, more than doubling year-on-year.
In response to complaints from European countries, the US government said European energy groups had been the real winners in the transatlantic LNG trade, rebutting criticism that North American producers were profiteering as Europe rushed to replace Russian gas.
But in the face of tight gas conditions, European countries still need to rely on the United States for gas supplies. On November 7, local time, the British "Daily Telegraph" reported that British Prime Minister Sunak was ready to announce a gas deal with the United States after the COP27 climate summit. The agreement will allow the United States to supply Britain with about 10 billion cubic meters of liquefied natural gas (LNG).
The deal is in its final stages and is expected to close in a week or two, meaning Britain will spend a whopping $10 billion on gas.
Source: Brokerage China
