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Kamala Harris Promises to Work With South Korea About New Federal Tax Credit Concerns

When Joe Biden signed the Inflation Reduction Act, multiple countries argued that the new federal tax credit that it established was protectionist. Among these countries is South Korea, which will defend Hyundai’s and Kia’s interests as two of its most relevant automakers. During a visit to Japan, Kamala Harris promised to try to find a solution that would make this critical U.S. ally happy. It will be pretty hard without changing the new federal tax credit structure.
Kamala Harris meets the prime minister of Japan, Fumio Kishida, in the funeral of Shinzo Abe 7 photos
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The part that made South Korea, Germany, Japan, and other countries protest the new rules is the demand for raw materials and battery components to be made in the U.S. With that, even cars produced by Korean, German, or Japanese automakers on American soil may fail to comply. In South Korea’s case, that is even worse than that.

According to Bloomberg, South Korea invested $27.6 billion in the U.S. The Hyundai Group alone will put $5.5 billion into new factories in Georgia to make EVs and batteries. The problem is that they will only start to pump out their products in 2025. That can make Korean products fail to compete with those already produced in American plants. That’s what South Korea is not willing to accept.

The U.S. vice president went to Japan to attend the funeral of Shinzo Abe, the country’s former prime minister, assassinated on July 8, 2022. She met the South Korean prime minister Han Duck-soo there.

This does not involve solely a trade dispute. South Korea is an essential ally in Asia, crucial for initiatives such as the Indo-Pacific Economic Framework and the Chip 4 Alliance that unites the most important semiconductor producers. So is Japan. Although both also view the U.S. as a key partner, China is a massive market for their companies, even more promising than the American market. Biden and Kamala know that upsetting U.S. partners in Asia is not a wise move. What we’re yet to discover is if they will be able to fix this.

 
 
 
 
 

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