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German chancellor Olaf Scholz and French President Emmanuel Macron convened to discuss mutual concerns during talks in Paris on Wednesday - concerning joining European forces to fight US economic dominance. 

According to sources familiar with the talks, they agreed that recent American subsidy plans will end up distorting the market, as they intend to sway companies to shift production to the US. 

The EU cannot stand by, the leaders agreed, if the US goes ahead with tax cuts and energy benefits for companies investing in the US under the Inflation Reduction Act. Moreover, the recent US legislation persuades consumers to “Buy American” if they look into purchasing an electric car, hitting industries in France and Germany.

In light of that, Macron made the first warning public in an interview with TV channel France 2. “We need a Buy European Act like the Americans, we need to reserve [our subsidies] for our European manufacturers,” he referred to state subsidies for electric cars specifically. 

The US was not the only challenge they were worried about, as Macron also named concerns about state subsidy competition from China: “You have China that is protecting its industry, the U.S. that is protecting its industry and Europe that is an open house,” he said, adding: "[Scholz and I] have a real convergence to move forward on the topic, we had a very good conversation.”

Europe to counteract to US with similar measures

Scholz announced on October 21 that he will lead a government delegation to China next month, after speaking at the EU Summit in Brussels, which had seen leaders debate the need to assert greater economic independence from China. 

He similarly conformed to the idea that in case the US does not consider the concerns addressed in these talks, Europe will counteract in measures like that of the US. 

Earlier this month, Scholz said publicly that Europe will have to discuss the Inflation Reduction Act with the U.S. "in great depth."

Wednesday witnessed plans by chemical giant BASF to dial down business activities and jobs in Germany, due to rising gas prices, which are six times higher than in the US, according to company chief Martin Brudermüller.

During a press conference following the EU summit in Brussels last week, Macron called out US "double standards" for selling gas to Europe at prices 3 to 4 times higher than it is sold in the US domestic markets.

"American gas is 3-4 times cheaper on the domestic market than the price at which they offer it to Europeans. These are double standards," Macron stated, adding that "it concerns sincerity in transatlantic trade" and that this issue should be addressed.

German Finance Minister Christian Lindner published in a tweet on October 27 that “the decisions of a successful company like BASF show that we need to improve the overall attractiveness of Germany as a business location,” as he promised more measures such as “tax relief for private investments.”

Die Entscheidungen eines erfolgreichen Unternehmens wie #BASF zeigen, dass wir die Attraktivität des Standorts Deutschland insgesamt verbessern müssen.👇

— Christian Lindner (@c_lindner) October 27, 2022

EU trade ministers to meet with US trade envoy

A newly established "EU-US Taskforce on the Inflation Reduction Act" that was completed during a meeting between European Commission President Ursula von der Leyen and US Deputy National Security Advisor Mike Pyle on Tuesday is expected to bring negotiations to occur between Scholz, Macron, and the US. 

The EU-US taskforce officials are due to meet via videoconference by the end of next week, and EU trade ministers will convene in an informal gathering in Prague next Monday alongside US trade envoy Katherine Tai. 

The Commission in Brussels is looking into Macron's term "Buy European Act," as it exhibits protectionist tendencies that the EU continuously but skeptically denies. 

Read more: Macron, Scholz fear for security, stability of Europe

"Every measure we take needs to be in line with the World Trade Organization rules," a Commission official said, after adding that Europe and the US should resolve their differences through negotiations and discussions and steer away from "tit-for-tat trade war measures as we experienced them under [former U.S. President Donald] Trump."