EU, South Korea Against Biden Inflation Act, Fears Threats To Industry

The European Union has "serious concerns" that the Biden administration's Inflation Reduction Act will hurt the continent's economy and industries, according to a CNBC report.

U.S. lawmakers approved the sweeping tax, healthcare and climate bill in August. E.U. officials say they are concerned the record $369 billion for climate and energy spending will directly hurt European companies. In particular, they say the plan's electric vehicle tax credit has the potential to impact European automakers focusing on EV production like Volkswagen AG (VOW3.DE) and Tata Motors Limited (TTM).

E.U. officials argue the act violates international trade rules. European and U.S. officials are meeting weekly to negotiate. They met for the first time last week.

The U.S.-European talks aim "to continue promoting deeper understanding of the law's meaningful progress on lowering costs for families, our shared climate goals, and opportunities and concerns for EU producers," the White House said in a statement.

South Korean officials also voiced concern, saying that automakers Hyundai Motor Company (HYMTF) and Kia Corporation (000270.KS) could be disadvantaged.

E.U. trade chief Valdis Dombrovskis at a news conference Tuesday said "that the E.U. should be, as a close ally of the U.S., in a position which is more similar to that of Mexico and Canada."

Fredrik Erixon, director of the European Centre for International Political Economy, said the Europeans have reason to worry.

He told CNBC that "it is obvious that the EU has legitimate concerns about the Inflation Reduction Act and direct and indirect discrimination in it."