Josep Borrell, the EU High Representative for Foreign Affairs and Security Policy, expressed strong critique of the United States inflation law, noting that the European Union does not possess a parallel system to channel state subsidies toward its own firms.
He emphasized that the US framework primarily offers government support to manufacturers adopting clean technologies within American borders. At the same time, the policy does not finance carbon emission reductions in the atmosphere, a point he underscored in his remarks.
“Such measures place European manufacturers at a disadvantage in trade relations and conflict with WTO rules,” Borrell stated, adding that the policy rests on a philosophy that diverges markedly from Europe’s approach.
According to him, the EU does not intend to—and cannot—compete with the United States on the basis of state subsidies, fearing broader risks to the global economy.
“The EU does not have the fiscal capacity comparable to a federal state in the United States, and adopting similar policies at the member-state level could fragment our single market,” he explained.
The EU representative also noted that European officials are engaging in ongoing discussions with American counterparts to address these policy differences and explore paths toward mutual understanding.
There is a sense among EU observers that American plans to accelerate green investments might influence European business strategy and trade dynamics, potentially prompting a shift in investment flows and partnership considerations across the Atlantic. The broader question remains how both blocs can align on climate-related subsidies, industrial policy, and trade rules without undermining competitive balance or triggering spirals of protectionism.
In the European view, sustainability and competitiveness must be pursued in tandem, with policies designed to spur innovation while safeguarding the integrity of global trade norms. The conversation continues, reflecting a shared interest in a resilient, climate-conscious economic framework that can operate effectively within a highly interconnected world economy.