How should Europe react to the Inflation Reduction Act?

A deep dive into the IRA and its expected impact on the world trade system.

Publishing date
09 February 2023

The Inflation Reduction Act (IRA) of 2022 is a milestone in US climate policy. Unfortunately, it also contains protectionist elements, such as linking green subsidies to local content requirements (LCRs). This is prohibited under WTO rules. Legislating such LCRs is a first for the United States, and a blow to the multilateral trading system.

In this episode of the Sound of Economics, Bruegel director Jeromin Zettelmeyer invites Kimberly Clausing and Sébastien Jean to discuss the policies laid out in the IRA and the impact it will have on the United States and other countries. They also discuss the global responses to the act and how EU policy makers in particular should react.

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Policy brief

How Europe should answer the US Inflation Reduction Act

This policy brief explains what is in the IRA, the impact on the EU and other economies, and how the EU should react.

David Kleimann, Niclas Poitiers, André Sapir, Simone Tagliapietra, Nicolas Véron, Reinhilde Veugelers and Jeromin Zettelmeyer