For years Brussels complained that America's Inflation Reduction Act and Buy America rules pulled investment across the Atlantic. Now the EU has written its own preference law, and Washington is the one objecting. The Industrial Accelerator Act treats the United States in two different ways at once — and that split decides which American companies win and which lose.
Status checked 28 October 2026 · Proposal stage — not yet law
TL;DR
- In public procurement, US-origin products can be treated like EU products where the EU has obligations under the WTO Government Procurement Agreement (GPA).
- In public support schemes — purchase incentives, subsidies, auction support — only FTA and customs-union partners count. The US has neither with the EU, so US-made content does not count.
- US companies that manufacture inside the EU are largely fine: origin follows where the product is made, not who owns the plant.
- Washington has rejected European preference, especially in defence, and has threatened to revisit its own Buy American exemptions for EU suppliers.
- The irony: US local-content rules are stricter in several areas — up to 75% US content for federally funded infrastructure products by 2029.
Key takeaways
- Exporters of US-made clean-tech, vehicles and materials into subsidised EU demand are the most exposed.
- US-owned plants in Europe — from Ford in Cologne to Tesla near Berlin — become relatively more valuable.
- Defence is handled by separate EU instruments, but the political fight spills over into the IAA debate.
- The law is still negotiable; adoption is not expected before mid-to-late 2027.
How does "Made in Europe" treat the United States?
The Industrial Accelerator Act (IAA), proposed by the European Commission on 4 March 2026, ties public money in strategic sectors to EU-origin and low-carbon requirements. Its equivalence clause decides which non-EU countries are treated as if they were EU origin — and it uses different tests for different kinds of spending.
For public procurement, the proposal deems products of countries with an FTA or customs union with the EU, or that are parties to the WTO Government Procurement Agreement, to be of EU origin — but only where the EU actually has obligations to them under that agreement. The United States has no FTA with the EU but is a GPA party, so US bidders keep a route into covered tenders, within the GPA's scope. That scope is narrower than it sounds: the European Parliament's research service notes that the US GPA schedule covers only 37 of the 50 states, and the EU's obligations mirror the coverage it receives.
For public support schemes, the test is stricter. Only content from countries with an FTA or customs union counts as EU origin; the GPA does not help. The EPRS briefing is explicit that US entities would fall outside the equivalence for support schemes. In practice, a US-made electric vehicle, heat pump or electrolyser would not count towards the EU-origin requirement when a member state subsidises its purchase.
The Commission also kept the power to exclude countries by delegated act if they fail to give EU products national treatment, or to avoid dependencies that threaten security of supply. Its own list of countries with procurement measures that disadvantage EU firms includes the United States, alongside Brazil, China, India, Indonesia, Russia and Türkiye.
Which American companies win and which lose?
Because origin follows the place of manufacture, the IAA sorts US companies by footprint, not nationality.
| US company profile | Example situation | Effect of the IAA |
|---|---|---|
| Manufactures inside the EU | Ford's EV production in Cologne; Tesla's plant near Berlin | Advantage Products can qualify as EU origin if they meet content rules; rivals importing from Asia or the US cannot. |
| Exports US-made clean tech into subsidised demand | Heat pumps, batteries, wind components, electrolysers sold under national support schemes | High risk US content does not count in support schemes; transition periods of one to six years apply by technology. |
| Bids for public tenders from the US | Equipment or vehicles supplied to GPA-covered contracting authorities | Depends GPA coverage helps, but only where the EU has corresponding obligations. |
| Supplies components to EU assembly plants | Electronics, motors or materials shipped to EU carmakers | Medium Counts as non-EU content in the 70% vehicle calculation. |
| Invests in EU battery, EV or solar capacity | Greenfield gigafactory or acquisition over €100m | Low FDI conditions apply only to investors from countries with >40% global capacity — not the US. |
The automotive rules show the pattern clearly. A vehicle bought or subsidised under a covered scheme must be assembled in the EU, with at least 70% of non-battery component value of EU origin and EU-made battery cells. A Ford van assembled in Cologne with European parts can qualify; a vehicle shipped from a US plant cannot. Ford Europe's president Jim Baumbick has argued for a broader definition based on where value is created — but his concern is mainly Ford's Turkish and British operations, not its US exports.
How has Washington reacted?
Opposition started before the text was even published. In February 2026, as the proposal slipped for the third time, the US ambassador to the EU said Washington rejected any attempt to build European preference into the bloc's procurement rules. Around the same time, the US State Department and Department of Defense sent comments rejecting "Buy European" in defence procurement. They argued that binding European-preference clauses would contradict the EU's commitment in the 2025 US–EU joint statement on trade to substantially increase purchases of US military equipment, and warned that Washington could review the exemptions that currently give EU suppliers access to US defence tenders under reciprocal procurement agreements.
Defence procurement sits in other EU instruments — the forthcoming Defence Procurement Directive, the SAFE loans programme and the European Defence Industry Programme — rather than in the IAA. But the political argument is the same: US officials and defence companies say American suppliers are embedded contributors to European security, not outsiders, and that exclusionary rules could weaken US political will to underwrite that security.
Trade tools are also in play, though not aimed solely at the IAA. On 11 March 2026 the US Trade Representative opened Section 301 investigations into "structural excess capacity" in manufacturing in 16 economies, including the EU. In Congress, a bill introduced in July 2026, the Stop EU Overreach Act, would direct USTR to open a Section 301 probe into EU energy and environmental rules with extraterritorial effect. Neither targets the IAA directly, but both show the instruments Washington could reach for if it decides European preference harms US exporters.
Isn't America's own rulebook stricter?
In several respects, yes — which is why European officials describe the IAA as catching up rather than escalating. The Build America, Buy America Act, part of the 2021 infrastructure law, requires iron, steel, manufactured products and construction materials used in federally funded infrastructure to be produced domestically, with the US-made share of components in manufactured products rising to 75% by 2029. The 2025 One Big Beautiful Bill Act kept iron and steel at 100% domestic for its clean-energy credit rules and raised the domestic-content threshold for manufactured products in steps: 45% for projects starting construction between mid-2025 and 2026, 50% from 2026 and 55% from 2027.
There is a further asymmetry. The Inflation Reduction Act's consumer EV credits, which tied eligibility to North American assembly and battery content, were largely unwound by the second Trump administration. The EU is now doing, through the IAA, something close to what the IRA did in its original form: attaching origin conditions to consumer and producer subsidies. European officials can therefore argue that they are following a US precedent, while Washington argues that Europe is discriminating against an ally.
What could happen next?
Path 1
Managed coexistence
The GPA route stays, US-owned EU plants benefit, and both sides treat their preference regimes as mirror images. Friction remains but stays technical.
Most likely if the final IAA keeps a broad procurement equivalence clause.
Path 2
Narrow EU list, US pushback
If Parliament's opt-in model wins, US access to covered tenders depends on a Commission decision. Washington could respond by revisiting Buy American exemptions or by using Section 301 findings.
Watch the 1 December committee vote.
Path 3
Sector deals
Specific arrangements — for example on defence equipment or critical minerals — carve out areas where US suppliers are treated as trusted partners in exchange for reciprocity.
Requires political will on both sides.
Path 4
Escalation
Tariffs or procurement bans on each side's strategic sectors. Least likely, but the tools exist in both capitals.
Signal: a Section 301 determination naming EU industrial policy.
What do the net-zero rules mean for US clean-tech exporters?
Beyond vehicles, the IAA sets EU-origin requirements for public procurement of net-zero technologies: solar PV, batteries and storage, hydronic heat pumps, onshore and offshore wind, nuclear fission technologies and electrolysers. These requirements phase in with transition periods of one to six years depending on how mature the European supply chain is in each technology.
For US exporters, two points matter. First, the transition periods give time to localise final assembly or key components in the EU before rules bite. Second, because support schemes do not recognise GPA partners, a US-made product sold into a subsidised programme — a national heat-pump grant or a renewable-energy auction with origin criteria — will face the full origin requirement once the transition ends. Large infrastructure projects, including nuclear new-build where US vendors compete, will need careful analysis of how procurement and support-scheme rules combine in each contract.
Investment, by contrast, is easier for Americans than for Chinese companies. The IAA's FDI conditions apply only to investors from countries above 40% of global manufacturing capacity in batteries, EVs, solar or critical raw materials — a test the US does not meet. A US company building a gigafactory in Europe faces normal national screening, not the 49% cap or joint-venture conditions.
What should US companies do now?
- Split EU revenue by channel. Separate private sales, GPA-covered public tenders and subsidy-dependent sales. Only the last two are directly exposed, and they are treated differently.
- Check GPA coverage contract by contract. Equivalence applies only where the EU has obligations; entity coverage and value thresholds matter.
- Model EU assembly for subsidy-dependent lines. If a product line depends on EU incentives, compare the cost of EU final assembly or EU-sourced key components with the expected loss of eligibility after the transition period.
- Map component origin for EU customers. If you supply parts into EU vehicles or equipment, your customers will need origin data to calculate the 70% threshold.
- Use the investment advantage. US investors face lighter conditions than Chinese ones in batteries, EVs and solar — a reason to consider EU partnerships now.
- Engage through business groups. AmCham EU and sector associations are active on the file; data on European jobs and value created by US companies carries weight in Parliament and Council.
Pro tip
A US firm with an EU subsidiary should document where value is added in Europe — engineering, assembly, sourcing — now. If the final law includes any value-added or grandfathering test, that record will be your evidence.
Risk to watch
The IAA is moving at the same time as a separate Public Procurement Act, proposed on 9 September 2026, that would let EU authorities restrict tenders to EU or "covered" bidders, give price advantages to EU content and exclude even GPA partners where the EU's strategic interests require it. The horizontal law could matter more for US bidders than the sector-specific IAA.
Made in Europe Tracker
Transatlantic milestones
- Feb 2026US ambassador and State/DoD reject European preference
- 4 Mar 2026IAA proposal: GPA counts for procurement, not subsidies
- 11 Mar 2026USTR opens Section 301 excess-capacity probes incl. EU
- 9 Sep 2026EU Public Procurement Act proposed
- Oct–Nov 2026Partner-list fight in Council and Parliament
- 1 Dec 2026Parliament committee vote
- 2027Trilogues; adoption expected mid-to-late 2027
Frequently asked questions
Are US companies excluded from "Made in Europe"?
Not as such. US-made products can be treated as EU origin in public procurement where the EU has GPA obligations, but not in public support schemes, which recognise only FTA and customs-union partners. US-owned factories inside the EU produce EU-origin goods.
Does the IAA restrict US investment in Europe?
The IAA's special investment conditions — such as the 49% ownership cap and joint-venture requirement — apply only to investors from countries holding more than 40% of global manufacturing capacity in batteries, EVs, solar or critical raw materials. That is aimed at China, not the US.
Is defence procurement part of the IAA?
No. Defence procurement is handled by other EU instruments, including a forthcoming Defence Procurement Directive, SAFE and the European Defence Industry Programme. But US objections to European preference in defence shape the political climate around the IAA.
When will the rules apply?
Not before adoption. Parliament's committees vote on 1 December 2026, trilogues follow in 2027 and adoption is not expected before mid-to-late 2027. Net-zero technology requirements then phase in with transition periods of one to six years.
Made in Europe Tracker · the series
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Sources
- EPRS — International dimension of the proposed IAA (Sep 2026)
- Skadden — European Commission Proposes Industrial Accelerator Act (Apr 2026)
- Euronews — EU's Made in Europe proposal suffers another delay (Feb 2026)
- Eunews — US rejects Buy European in defence procurement (Feb 2026)
- German Marshall Fund — The EU's IAA puts pedal to the metal (2026)
- White & Case — USTR initiates Section 301 investigations of 16 trade partners (Mar 2026)
- Holland & Knight — The European Union's Made in Europe push (May 2026)
- Hürriyet Daily News — Ford, Toyota and Hyundai on Made in EU (Oct 2026)
This article explains a legislative proposal that is still being negotiated. It is not legal, trade-compliance or investment advice.
Reviewed by the Kurums Industry desk · Startup › Industry › Automotive · Last checked 28 October 2026
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