The $369 billion plan that favors American-made climate technology through subsidies will unfairly discriminate against firms based in the European Union.

This week the European Commission Vice President Margrethe Vestager told lawmakers “We already have war in Europe. The last thing we need is a trade war.”

The lower energy prices and discounts of the legislation, now taking effect, are enticing businesses in the European Union to relocate to the United States.

The EU is the main loser to the U.S. legislation as its auto, metal, or fertilizer factories are moving or planning to move to the U.S.

The planned subsidies under the Inflation Reduction Act passed by the U.S. Congress in August are especially harsh for the EU. For example, electric car buyers are eligible for a tax credit of up to $7,500 as long as the vehicle runs on a battery built in North America with minerals mined or recycled on the continent.

Experts say this is an inevitable result of U.S. policies. Washington has already succeeded in its policy of expanding NATO and creating chaos in Europe which is witnessing inflation not seen in 40 years.

There is a looming economic recession in the EU as well as a war going on at the same time.

This is the inevitable result of the European government’s refusal to say NO to Washington’s push to expand NATO.

Experts say if the EU had the courage to say reject NATO’s expansion by pointing out the dangers of such a move, the bloc would not be suffering right now.

In other parts of the world, governments are refusing to go along with U.S. policies arguing it would bring about regional insecurity... far away from American borders.

In East Asia, despite attempts by the U.S. to create crises in places like the South China Sea; there are countries in the region that are not going along with Washington. 

Europe went along with the U.S. and, as a result, has been plunged into a very deep crisis.

How deep this crisis will become, hinges on whether the EU decides to stand up to the U.S. or not.

French President Emmanuel Macron has asked the EU to counter the American initiative. The excessive subsidies, protectionism, and the law has left Brussels feeling like Washington is betraying the spirit of fair competition among supposed allies. Macron did complain to President Biden that the measures are unfair to the European market.

There is no doubt that this is a protectionist policy on part of the United States.

It’s very similar to the type of policy that former U.S. President Donald Trump used to take when he was in office. 

In essence, Biden is following in Trump’s footsteps.

The EU has been threatening reciprocal measures to try and protect its industries with the auto sector in particular. 

The head of the EU’s executive branch said she would propose initial plans next month. 

Whether that actually happens remains to be seen.

The reality is that this could potentially develop into an all-out trade war between Brussels and Washington. But experts say this is very unlikely to happen, especially now. 

This is because the EU as a whole with its energy crisis, as a result of the Ukraine war, has never been left so vulnerable. The fact is although America can provide the EU with Liquefied Natural Gas (LNG), which is now essential for the EU, Washington simply cannot ship enough to Europe.

In terms of the EU’s energy providers, there is no way it can be energy independent or self-reliant at this moment in time. Some say the EU will not respond in any meaningful way, despite being savaged economically.

Next year, the EU will still desperately need American LNG despite this supply being nowhere near enough to meet the bloc’s capacity. That has left the EU in a very vulnerable position as to what sort of action it can take.

This gives a major advantage to the U.S. against its European allies.

At the end of the day, it is U.S. policy and NATO policy that has left the EU in a position where its entire energy supply from Russia has been almost cut off.

The president of the European Council, Charles Michel says the bloc is keeping all channels open, including gas imports from Qatar, despite a recent scandal rocking some of the bloc’s senior officials.

A major problem or controversial issue which is obviously present but being avoided as a subject for discussion is that the EU will have little to no gas supplies in 2023. 

To make matters worse, there are no major strategies or plans that the 27 members of the bloc can agree on how to secure alternative energy suppliers to Russian gas.

Experts say that the Nord Stream pipeline that pumped most of Russia’s energy to Europe, via Germany, is all part of a wider Washington scheme.

The U.S., in essence, has two enemies in the war on Ukraine. One is Russia and the other is Germany. Both have been targeted by the U.S.

Washington has been very successful in creating chaos in Europe and Germany in particular. Berlin's finance minister says the country's public deficit will grow 3.2 percent of its GDP next year, amid a biting energy crunch. The minister warns of an even worse deficit if the government increases its spending.

Again, if Europe said NO to America’s plans to expand NATO there would have been no crisis. And no European businesses would be relocating outside of Europe.

But just like Trump, Biden has gone after Russian gas went after Germany because it pushed ahead with the Nord Stream 2 project that would have provided more gas for Europe.

Washington has been successful in both measures with Biden finishing what Trump started. 

EU leaders have certainly expressed their disappointment two years after the election of Biden, a man they expected to reset trans-Atlantic relations with Europe.

While EU leaders are openly talking about retaliatory measures rather than friendship. They also admit that conflict with Washington is the last thing they want, with war raging on their doorstep in Ukraine. 

Brussels is still under some kind of illusion that the Pentagon is interested in ending the Ukraine war.

“Elements of the Inflation Reduction Act risk un-leveling the playing field and discriminating against European companies,” European Commission President Ursula von der Leyen told EU leaders on the eve of their year-end summit.

Von der Leyen also went to the EU legislature to vent her complaints, saying: “Three aspects are particularly worrisome. First of all, the ‘buy American’ logic that underpins large parts of the IRA. Second, the tax breaks could lead to discrimination. And third, the production subsidies could disadvantage European companies. We need to address these.” 

There were signals of an impending tit-for-tat subsidy race. “We need to give our answer, our European IRA,” von der Leyen said. “We need to make sure that investment aid and tax credits reach the concerned sectors more easily and faster.”

The potential actions the EU can take our complaints to the World Trade Organization or impose trade sanctions itself.

Despite financial losses, Washington's measures may pose a threat to the economic unity of the two sides, but any substantial retaliatory measure by the EU is highly unlikely, especially not from a political point of view.

Reports suggest there are hints of widening division between Washington and Brussels despite Europe initially welcoming Biden’s arrival as a U.S. leader who would end trade disputes.

But does the EU have the courage to stand up to the United States?

All the indications so far are that it does not.