Chip Agreement – Biden’s CHIPS Act 💻

Chip Agreement – Biden’s CHIPS Act

The US and Europe are in sort of an economic conflict now, and this is a result of President Biden’s recent economic policies. After Biden’s agenda went through some rough times, he was able to get 2 major legislative wins in 2022: The Inflation Reduction Act and the CHIPS Act, both of which aim to boost American businesses and manufacturing to compete with China. However, this looked to have more of a greater impact on the globe than the US, with Europe raising an eyebrow. Europe dislikes the legislation as they believe it will significantly weaken European businesses, and this is because the US is providing massive subsidies and tax benefits to climate and chip companies. Gaining an advantage, investment would shift from European businesses to American businesses, putting Europe in an inherent disadvantage when there’s supposed to be an economic alliance.

President Macron of France expressed this displeasure to President Biden during a recent state visit, and as a result negotiations between the two sides have occurred. Although no agreement has been made regarding the electric vehicle side, both parties made a step forward when it comes to semiconductors. The US and EU, along with other allies, agreed to share information about their semiconductor programs to promote domestic production across all nations. They agreed that China’s hold on the chip market needs to be reduced, and it’s convenient given that the European Union has also passed a bill regarding chip production. With this cooperative measure, companies are set to benefit in both countries as there aren’t any apparent loopholes to exploit. Lastly, they have set systems to warn of supply chain disruptions in both economies as that was a major problem during the pandemic when it comes to chips. The importance of chips in today’s world can’t be stressed more, so this agreement means a lot for the global economy.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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