France Urges U.S. to Change ‘Made in America’ Electric Car Policy

France has warned the United States that its recently passed climate and energy law threatens the economies of Europe and urged the Biden administration to enact the law so that subsidies for American electric vehicles do not put European carmakers at a competitive disadvantage.

The warning came during meetings at the Group of 20 leaders’ summit in Bali, where top officials gathered to discuss the fraught state of a global economy gripped by inflation and war. The tension between Europe and the United States over the Inflation Reduction Act is straining relations among allies that have shown unity in confronting Russia over its war with Ukraine and reflects the growing concern about an economic slowdown.

“I think we that we can fully understand the determination of the American government to defend their economic interest and promote greener technologies,” Bruno Le Maire, France’s finance minister, told reporters on the sidelines of the G20 meetings on Wednesday. “But it should not have negative side effects on their European allies and the European economy.”

France and other European nations are concerned about more than $50 billion in tax credits that are intended to entice Americans to buy electric vehicles. The law restricts the credits to vehicles that are assembled in North America.

The law also sets strict requirements over the components that power electric vehicles, including batteries and the critical minerals that are used to make them. That is creating incentives for battery makers to build recycling and production facilities in the United States.

Mr. Le Maire raised his concerns directly to Treasury Secretary Janet L. Yellen in a meeting this week. France and many European economies are concerned that a rise in protectionism will further slow the global economy, and Mr. Le Maire does not think it would be financially wise to engage in a race with the United States to subsidize domestic industries.

After her meeting with Mr. Le Maire on Monday, Ms. Yellen said the United States was open to hearing the concerns that France and others had about the law and would try to address them.

“We stand ready within the limit of the law that Congress passed to work with them to address concerns to the extent that we possibly can,” Ms. Yellen said.

It is unlikely that the U.S. law can be amended by Congress, and it is not clear what authority Ms. Yellen has to carry out the tax credits in a way that would satisfy European concerns.

In the interview, Mr. Le Maire underscored the economic headwinds facing France and Europe as an embargo on Russian oil that takes effect next month could send energy prices higher this winter. He said that the Inflation Reduction Act was compounding these economic threats and that it was urgent for the two countries to find a solution before President Emmanuel Macron’s visit to Washington in early December.

“We don’t want at the end of the war in Ukraine to have Europe being weakened,” Mr. Le Maire said.