A staff member hangs a US flag before US President Joe Biden arrives for the European Council meeting in Brussels, Belgium on March 24, 2022. The European Union is facing an economic recession, with manufacturing activity falling to its lowest level since May 2020 and economic growth for the eurozone declining to 0.2 percent in the third quarter of this year. The Russia-Ukraine conflict has resulted in a surge in consumer prices, which hit a record high of 10.7 percent last month, compared to 9.9 percent in September.
The EU's economic problems are being compounded by a looming subsidy war with the United States after President Joe Biden rolled out a sweeping $369 billion energy and climate legislation in August to support green industries.
Many European businesses are considering moving their investments from Europe to the United States due to the huge subsidies that the US provides under the Inflation Reduction Act for companies in specific sectors such as electric vehicles.
The EU Industry Commissioner Thierry Breton warned that Washington's new subsidy package is an existential challenge to Europe's economy because of the trend, which is likely to turn the continent into an industrial wasteland.
The EU is reportedly considering rolling out a fund of its own, possibly a European Sovereignty Fund, to help businesses in Europe, in response to US subsidies. It is now a matter of utmost urgency to reverse the deindustrialization process taking place, according to Breton.
French President Emmanuel Macron has been vehement in trying to join European forces against the unjustified and unfair US economic move. He said in a recent TV interview that we need to reserve our subsidies for our European manufacturers because of the subsidies to EVs. We need a Buy European Act like the Americans.
The situation in Europe may be a chance for it to make some soul-searching decisions when it comes to its relationship with the US. Many EU countries were excited about the possibility of the possible political, economic and security benefits they would be able to reap when Biden declared that America is back, the transatlantic alliance is back, and that the US-Europe partnership must remain the cornerstone of everything we hope to accomplish in the 21st century.
Europe must retain its strategic autonomy for the good of its own interests when dealing with the US.