Negotiation Measures to Minimize the Damage Caused by the US Inflation Reduction Act to Korean Electric Automobile Supply Chain

The US Inflation Reduction Act is expected to cause significant damage to the electric vehicle industry in Korea and EU. This study focuses on negotiation measures between Korea and USA to minimize damages related to the supply chain of the automobile industry, which is expected from the implementation of the IRA. The IRA is ultimately intended to build a US-centered electric vehicle production ecosystem, and from the standpoint of the Korean automobile industry, it is necessary to move away from relying on China for major raw materials for batteries so far, and to restructure or significantly adjust the supply chain. Regarding the IRA, both the Korea-US negotiations and the Korea-China negotiations have important meaning considering the future growth engines of electric vehicles and batteries. In negotiations with the United States, it is desirable for Korea to recognize that the nature of the issue is derived from the multilateral economic hegemony of the United States, and to engage in negotiations based on principle, that is, a problem-solving attitude that excludes political and diplomatic relations with both the United States and China. For the US, it is desirable to pursue a strategy that maximizes the actual benefits that can be obtained from local foreign direct investment rather than focusing on the application of exceptions to the IRA Act. If Korea fully accepts the US position on the IRA and makes a decision against China’s interests, there may be a threat of retaliation from China, and we must prepare for this at various levels.