The Biden Administration’s proposed EV tax credit for American-made vehicles could run afoul of the terms in the United States Mexico Canada Agreement (USMCA).
A letter signed by Canadian Trade Minister Mary Ng that was viewed by Reuters last week indicates Biden’s proposed EV tax credit “would have a major adverse impact on the future of EV and automotive production in Canada.”
Under the proposed EV tax credit laws, American purchasers of EVs would be entitled to a $7,500 federal rebate, along with an extra $4,500 for American-made EVs assembled in union facilities and a further $500 if the vehicle had an American-made battery pack. In the letter, Ng said the tax credits would have an adverse impact on the Canadian automotive industry and noted the proposal may run afoul of the terms of the USMCA.
Ng also said she was concerned about the U.S.-centric “protectionist elements” of the proposed EV tax credits, Reuters reports, saying the legislation puts Canadian-made EVs and components at a disadvantage. She also pointed out in the letter that Canada is “also necessary for the United States to achieve its electric vehicle objectives in the future,” as it is home to various rare earth minerals needed to produce EV battery packs, including lithium and cobalt.
Certain foreign automakers have also expressed concern over the tax credits. A group of several German, Korean and Japanese automakers recently signed a letter urging the U.S. House of Representatives to reject the proposed EV tax credit for union-made vehicles, saying the credit would “unfairly disadvantage American workers who have chosen not to join a union.”
Reuters‘ source in Canada said the government would step up its lobbying efforts in the near future in order to try and change the U.S. EV tax credit proposal before it becomes law.
“Ideally we would be able to change the legislation before it gets passed,” the source said.
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Comments
Should be $7500 in general, and the extra $4500 should be for American made, regardless of Union or not. It makes the most sense, which is why it won’t happen.
Should be $7500 in general, and $4500 goes to charging and general roads infrastructure
That works too. I just meant if you were going to add more on top. $7500 that isn’t phased out based on production levels per manufacturer, but phased out after years or a certain percentage of the new cars purchased in the country as a whole are EV would be more than adequate. Also for it to be applied at time of purchase instead of as a credit on next year’s tax return.
The lack of the credit wouldn’t stop me from buying a GM vehicle, but it is definitely something to think about, when comparing two similarly priced and equipped vehicles.
Why is Canada upset? Both Canadá and the U.S. are American nations.
Because any Canadian produced EVS and exported to the US would not be eligible for the subsidy and at a substantial disadvantage !
$7500. + $4500 + $500. ??
How much is it going to take to force EV’s
down the throat of America?
It’s the Government VS ICE Manufacturers.
Is that your new “fairness”, Joe?
How is this Government vs ICE manufacturers? The products that consumers will benefit most from purchasing their union produced vehicles are from the same companies that are currently making ICE vehicles.
Scabs can join the Union, problem solved.