(Washington) Prime Minister Justin Trudeau said Canada would “align” its own incentives for electric vehicles with those south of the border if cars and trucks built in Canada could qualify for the tax credits offered to states -United.
Trudeau noted that the two countries have been building cars together for more than 50 years – an alliance threatened by President Joe Biden’s efforts to increase sales of vehicles made in the United States by unionized workers.
Deputy Prime Minister Chrystia Freeland and Trade Minister Mary Ng warned Congress last week against retaliatory tariffs and other punitive measures if the tax credit proposal becomes law.
In a letter published on Friday, Mmy Freeland and Ng proposed to make vehicles and batteries assembled in Canada eligible under the US plan, which would represent up to US $ 12,500 in tax credits for a potential car buyer.
Mr. Trudeau’s comments, however, suggest that Canada may offer a comparable package that would apply to vehicles assembled in either country.
The federal government is already planning to revamp its existing rebate program, which only applies to new zero-emission vehicles with a maximum base price between $ 45,000 and $ 55,000.
During the federal election campaign, the Liberals pledged to spend $ 1.5 billion over the next four years to expand the program to increase the number of electric vehicles on the roads.
“We are working very hard with the United States to make them understand that this rebate offered on electric vehicles built in the United States is obviously not good for Canada, but it is not good for the United States either. United, ”Trudeau said at a press conference.
“We have put forward several solutions. One of them would be to align our incentives in Canada and the United States, to ensure that there is no slippage or unfair advantages on one side or the other. We are happy to do so. ”
Friday’s letter was addressed to key members of the United States Senate, which is expected to vote in the coming weeks on the Biden administration’s $ 1.750 billion social and climate spending program, which includes the new vehicle tax credits. electric.
The proposal is equivalent to a 34% tariff on electric vehicles assembled in Canada and violates the terms of the United States-Mexico-Canada agreement, or ACEUM, wrote Mr.my Freeland and Ng – not to mention the affront he represents to a country that has been a partner of the United States in building cars and trucks for half a century.
“We want to be clear that if there is no satisfactory solution to this issue, Canada will defend its national interests, as we did when we were faced with unjustified tariffs on steel. and Canadian aluminum, ”the letter reads.
The letter also promises an upcoming list of U.S. products that Canada is prepared to target with tariffs, both in the auto sector and beyond.
Senate Majority Leader Chuck Schumer wants a vote on the legislation, which has already been approved by the Democratic-controlled House of Representatives, before Christmas. Few consider the timetable realistic, especially after new economic data on Friday pegged the inflation rate at 6.8%.
Vehicles built in Canada include approximately 50% American content, according to letter from Mmy Ng and Freeland, with more than 22 billion American auto parts imported by Canadian manufacturers each year.
“To be clear, we don’t want to go down the road of confrontation,” the letter said. “This has not been the history of relations between our two countries – and it should not be the future. ”
The letter also threatens to press the pause button on some concessions Canada has already made to U.S. dairy farmers under CUSMA, saying electric vehicle tax credits would be “a significant change in the economy.” balance of concessions ”agreed as part of the agreement.