The USA has returned to the fight against climate change with the Inflation Reduction Act (IRA). The European reaction to this recalibration of U.S. climate and economic policy has been mixed. This study by Tom Krebs examines the IRA from a climate and economic policy perspective and draws a positive conclusion. In addition, the study derives recommendations on how policy makers in Germany and Europe could respond to the IRA, breaking with the market liberal approach of currently practiced economic policy in the EU.