U.S. Trade Agency Backs Proposed Electric Vehicle Tax Credit Over Mexico’s Objections

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Electric cars are charging in a parking lot at the University of California, Irvine, January 26, 2015. REUTERS / Lucy Nicholson / File Photo

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Dec. 3 (Reuters) – The U.S. Commerce Representative’s office on Friday said it was determined to pass legislation strengthening the U.S. electric vehicle industry despite the inclusion of a tax credit that has sparked threats of retaliation from Mexico, which qualifies it as “discriminatory”.

The proposed electric vehicle tax credit of $ 12,500 would include $ 4,500 for electric vehicles built in the United States by unionized workers, starting in 2027. It is included in the Biden administration’s extensive legislation on climate and social spending currently under consideration by Congress.

Mexican Economy Minister Tatiana Clouthier said the tax credit was “discriminatory” and would violate the United States-Mexico-Canada trade agreement. Mexico is analyzing a series of response lawsuits that may include tariffs, Clouthier said Thursday.

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“In the past we have imposed tariffs and we had to do or come up with something very important and strategic for these products, where it hurts them… so that the consequences can be felt,” Clouthier said during a press conference.

She added that it was “totally against free trade” and had previously berated the United States for pursuing what she described as protectionist policies that could backfire and spur more migration to the United States. American border.

US Trade Representative Katherine Tai said she was aware of objections from trading partners and was discussing the matter with them.

“The Biden-Harris administration is committed to addressing 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 a range of stakeholders, including our close business partners, as Congress considers legislation to strengthen US leadership in the sector,” he added.

In late October, Mexico, along with the European Union, Germany, Canada, Japan, France, South Korea, Italy and other countries wrote to U.S. lawmakers claiming that the credit for proposed tax for electric vehicles violated international trade rules.

The proposal was backed by US President Joe Biden, the United Auto Workers (UAW) and many Congressional Democrats, but opposed by major international automakers including Toyota Motor Corp (7203.T), Volkswagen AG (VOWG_p .DE), Daimler AG, Honda Motor Co, Hyundai Motor Co (005380.KS) and BMW AG (BMWG.DE).

The issue of the electric vehicle tax credit was also due to be raised by Canadian Trade Minister Mary Ng in meetings this week with Tai in Washington, along with other US-Canadian trade irritants, including over US tariffs. on lumber.

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Reporting by David Lawder and Anthony Esposito; Editing by Chizu Nomiyama

Our standards: Thomson Reuters Trust Principles.

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