A subsidy race with the United States would be the wrong way for the European Union to go in response to the U.S. Inflation Reduction Act, German Chancellor Olaf Scholz said on Wednesday.

“We want to further deepen economic relations with the U.S.,” he told the Bundestag lower house of parliament according to a manuscript of his speech, addressing lawmakers ahead of a meeting with fellow EU leaders that starts on Thursday.

“Our ongoing talks on the Inflation Reduction Act are a good starting point for this – at least if the U.S. renounces rules that put European companies at a disadvantage compared to companies from Canada and Mexico, for example,” he said.

“A subsidy race with the USA would certainly be the wrong way to go,” he added.

(This story has been refiled to remove ‘Hold’ in headline)