 Europe prepares to trade war with the United States. Europe is seriously preparing to trade war with the United States. The famous political addition warns about it. Europe's fears hinge on America's $369 billion package of subsidies and tax breaks to bolster U.S. green businesses, which comes into force on January 1st. The bugbear for the Europeans is that Washington's scheme will encourage companies to shift investments from Europe and incentivize customers to buy American when it comes to purchasing an electric vehicle, something that infuriates the big EU car-making nations like France and Germany. A truce seems unlikely, however. If this path now spirals out of control, it will lead to a trade war, something that terrifies the beleaguered Europeans. While the first step would be a largely symbolic protest at the World Trade Organization, the clash could easily slide precipitously back toward the tit for tat tariff battles of the era of former U.S. President Donald Trump. This means that momentum is growing in Berlin for a radical plan B. Instead of open tariff war with America, the increasingly discussed option is to rip up the classic free trade rulebook and to play Washington as its own game by funneling state funds into European industry to rear homegrown green champions in sectors such as solar panels, batteries, and hydrogen. France has long been the leading advocate of strengthening European industry with state largesse. But, up until now, the more economically liberal Germans have not wanted to launch a subsidy race against America. The sands are now shifting, however. Senior officials in Berlin said they are increasingly leaning toward the French thinking. Should the talks with the U.S. not lead to an unexpected last-minute solution, Berlin is the 27 nation bloc's economic powerhouse, so it will be a decisive moment if Berlin ultimately decides to throw its might behind the state-led subsidy approach to an industrial race with the U.S.