Mexico has labeled the U.S. planned electric vehicle tax credit as “discriminatory” and could retaliate with tariffs.
The Biden administration has proposed a new $12,500 federal tax credit for electric vehicles that would include $4,500 for cars made at unionized factories across the country. The proposal would also restrict the tax credit to U.S. built vehicles after 2027.
Speaking about the proposal, Mexican economy minister Tatiana Clouthier said that it is “totally contrary to free trade” and that she will do what she can to support the nation’s car industry.
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“In the past we have imposed tariffs and we would have to do or propose something very important and strategic for those products, in those places where it hurts them… so that the consequences can be felt,” Clouthier said. “The effect on our auto exports would have a very large impact on this sector that creates a lot of jobs… and could even generate additional migratory pressures.”
Mexico isn’t the only country that has opposed the proposed tax credit. In fact, countries such as Germany, Canada, Japan, France, South Korea, Italy, and the whole of the European Union wrote to U.S. lawmakers in October stating that the credit would violate international trade rules, Reuters reports. Carmakers that build vehicles in the U.S. at non-union factories, including Toyota and Honda, have also expressed their opposition to the plan.
Mexican president Andres Manuel Lopez Obrador appointed his former campaign chief Tatiana Clouthier as economy minister in December 2020 in a bid to improve communications between powerful business interests and the government. Clouthier’s father was a presidential candidate for the country’s center-right National Action Party in 1988.
