Canada isn’t happy about the Biden administration’s plans to boost tax credits for electric vehicles built in the U.S.
The U.S. government wants to increase EV tax credits to $12,500 for vehicles built in union factories with U.S.-produced batteries. After five years, the credit would drop to $7,500 and only be available for vehicles built in the U.S. In response, Canada is threatening to impose tariffs on select U.S. exports, noting that the proposed tax credit amounts to a 34 per cent tariff on EVs assembled in Canada.
Read Also: Mexico Says U.S. Plan For Union-Made EV Tax Credits Is “Contrary To Free Trade”
Canada’s Deputy Prime Minister Chrystia Freeland and Trade Minister Mary Ng wrote a letter to key Senate leadership members and are promising a raft of tariffs.
“We want to be clear that if there is no satisfactory resolution to this matter, Canada will defend its national interests, as we did when we were faced with unjustified tariffs on Canadian steel and aluminum,” the letter reads. “In that regard, Canada will have no choice but to forcefully respond by launching a dispute settlement process under the USMCA and applying tariffs on American exports in a manner that will impact American workers in the auto sector and several other sectors of the U.S. economy.”
A full list of U.S. products in the firing line will be published “in the coming days,” Auto News reports.
A plethora of countries and automakers have expressed fierce opposition to the proposed tax credits. These include the likes of Honda, Toyota, Volkswagen, and Tesla, while just last week, Mexico stated the credits would be “contrary to free trade.” The European Union has also wrote to U.S. lawmakers stating the credit would violate international trade rules.
