According to reports, France and Germany have come to an understanding that the European Union (EU) will be forced to take retaliatory action against the United States if the US goes ahead with its planned tax reductions and energy benefits, which are intended to encourage businesses to move production to the United States.

On Thursday, the news website Politico reported that Chancellor Olaf Scholz & French President Emmanuel Macron share concerns over the Inflation Reduction Act proposed by the White House, which both men consider to be “protectionist.”

It was said that they addressed the issue when they were having a meal in Paris a day earlier. According to the publication, which cited “people familiar with their conversations,” the two leaders reportedly came to the conclusion that the state subsidy scheme proposed by the United States would entail unfair competition and that it should not go unanswered.

According to Politico, their accord came about in spite of the fact that Scholz and Macron have different points of view on a number of other significant matters, including energy and military.

It has been stated that Paris and Berlin have reached an agreement to offer comparable EU-wide incentive packages for firms in order to combat the intentions that Washington has.

The report said that if the proposal were put into effect, it would increase the likelihood of a trade war breaking out between the bloc and the United States.

Macron advocated for a “Buy European Act such as the Americans” when making an appearance on the television station France 2 late Wednesday evening. He also said that the European Union should “keep [our incentives] for our European producers.”

Macron went on to say that he and Scholz had a “really excellent chat” and that the two of them have a “genuine consensus” over how to go ahead with the issue.

According to Politico, the two major powers in Europe do not want to enter a state of conflict any time soon. Instead, they would rather sit down at the negotiation table with the United States and try to reach a settlement with them.

According to the information provided in the article, this may be possible through the “EU-US Taskforce mostly on Inflation Reduction Act,” which was established on Tuesday during a meeting between the President of the European Commission Ursula von der Leyen and the Deputy National Security Director for the United States of America, Mike Pyle.

In addition, an initial chat of EU trade officials is going to take place in Prague on the Monday after next. US trade ambassador Katherine Tai is going to be present at the event.

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