Home New mexico tax ‘Discriminatory’ electric vehicle tax credit could lead to tariffs imposed by Mexico

‘Discriminatory’ electric vehicle tax credit could lead to tariffs imposed by Mexico

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The $ 12,500 electric vehicle tax credit proposed in President Joe Biden’s “Build Back Better” plan is called “discriminatory” by Mexico’s Economy Minister Tatiana Clouthier, who said the country analyzed legal remedies and other actions, including potential tariffs against the United States. .

Clouthier says the electric vehicle tax credit is “totally contrary to free trade,” especially since the rebate includes additional funds for consumers if the vehicle is built in the United States and is equipped with it. an electric vehicle battery produced in the United States. The terms of the tax cut, which favor U.S.-based manufacturing efforts, are damaging the country’s auto exports, Clouthier argues. Thursday, she declared, “the effect on our auto exports would have a very important impact on this sector which creates a lot of jobs … and could even generate additional migratory pressures”.

$ 12,500 tax credit for electric vehicles included in the “Build back better” plan now adopted

The United States has used an EV rebate for years to the tune of $ 7,500. This credit applies to any electric vehicle manufactured by a company that has sold less than 200,000 units, which means Tesla and GM vehicles are not eligible for the rebate. The main differences between the old credit and the new one are the amount of the rebate, its potential to be “refundable” and the positive effects it could have on American manufacturing.

It appears that Clouthier is not in favor of a large-scale reliance on international trade, especially as global supply chain issues continue to plague the auto industry. She said this was “not a desirable course of action,” but said Mexico would do everything in its power to support its auto industry. Reuters says Mexico’s auto industry employs around one million people.

This is not the first time that entities have expressed their dissatisfaction with the new incentives for electric vehicles. In October, the European Union, Germany, Canada, Japan, Mexico, France, South Korea, Italy, Poland, Sweden, Spain, Austria, the Bas, Belgium, Cyprus, Ireland, Malta, Finland, Romania and Greece have argued before US lawmakers. that the tax credit violated federal trade rules by “limiting eligibility for the credit to vehicles based on their US national assembly and local content.” The countries also said the credit “is inconsistent with the United States’ commitments under multilateral WTO agreements.”

The tax credit was voted as part of the “Build back better” plan adopted by the House of Representatives in November. It then goes to the Senate.

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‘Discriminatory’ electric vehicle tax credit could lead to tariffs imposed by Mexico