South Korea
felt ‘betrayed’
when President Biden signed his
administration’s flagship climate legislation, the
Inflation Reduction Act (IRA) of 2022, into law. This article first shows how
the Biden administration addressed Korea’s
concerns about the law’s effect on its sales of electric
vehicles (EVs) in the United States. Thanks in part to the Treasury Department’s regulations written to implement the law, Korean exports of
EVs to the United States grew even after the IRA went into force. Whether these
actions by the Biden administration are enough to assuage the concerns of the
Koreans – and other allies adversely affected by the IRA – remains to be seen. Furthermore, the US accommodation of
Korean concerns came with tradeoffs by offsetting key incentives Congress may
have intended in passing the IRA. The article also examines potential impacts
of the law on South Korean battery companies, and it provides an initial
exploration into how the Korean government responded to IRA by adjusting its
own policy mix of EV consumer tax credits and industrial policy for its EV
plants and battery makers.