USTR supports efforts to strengthen the US EV industry despite Reuters

By David Lawder

(Reuters) – The U.S. Trade Representative’s office on Friday said it was committed to strengthening the domestic electric vehicle industry legislation, despite obstacles in Mexico and Canada, around a tax credit for electric vehicles built by U.S. union workers.

The proposed $ 12,500 electric vehicle tax credit would include $ 4,500 for union-built electric vehicles built by union workers in effect from 2027. What the Congress is looking at is included in the broad legislation on the climate and social spending of the road administration.

Canadian Commerce Minister Mary Ng told Reuters on Friday that Canada still had room for maneuver to persuade U.S. senators to block the U.S. Senate from approving a specific EV provision made by U.S. unions approved by the House of Representatives.

He said Canada would “respond that way” if it goes into effect, but did not specify details. He added that the proposed credit violates the US-Mexico-Canada trade agreement and will undermine Canada’s efforts to produce electric vehicles.

Her comments echoed Mexican Economy Minister Tatiana Clouthier, who said the tax credit was “discriminatory” and considered some legal options that Mexico may have for tariffs.

“We have set tariffs in the past and we should do or propose something that is very important and strategic for these products, in those places that hurt them … so that the consequences can be felt,” Clouther said in a press conference.

He added that he was “completely opposed to free trade” and described the United States as a protectionist policy that threatened to back down and encourage more migration to the U.S. border.

U.S. Trade Representative Katherine Tai said she was aware of the concerns of trade members and was discussing the issue with them, but did not say exactly whether she would accept the proposed EV tax credit proposed by U.S. unions.

“The Biden-Harris Administration is committed to tackling the threat of climate change by supporting the transition to electric vehicle manufacturing,” USTR spokesman Adam Hodge said in a statement.

“We will continue to engage with a variety of stakeholders, including our close trading partners, as Congress examines legislation to strengthen its leadership in the U.S. sector,” he added.

In late October, Mexico, along with the European Union, Germany, Canada, Japan, France, South Korea, Italy and other countries wrote to the US Parliament that the proposed electric vehicle tax credit violates international trade rules.

U.S. President Joe Biden, the United Auto Workers (UAW) union and many Democrats in Congress have backed the proposal, but major international automakers have opposed it, among others. Toyota Motor (NYSE 🙂 Corp., Volkswagen AG (OTC :), Daimler AG (DE :), Honda Motor Co., Hyundai Motor Co. and BMW AG.