Mexico Considering Tariffs Due To Proposed US EV Tax Credit

We’ve shared plenty of recent coverage about the Biden Administration’s proposed US EV tax credit, which would provide an additional $4,500 for union-produced US electric cars. Based on the information that’s available so far, if the proposal passes, only the Chevrolet Bolt EV and Bolt EUV will be eligible for the credit, at least initially. Sadly, neither Bolt is currently in production or available to buy new.

Canada has already pointed out that the potential tax credit may violate trade deals. Now, Mexico is following suit with Canada in an effort to encourage the US government to reconsider. Mexico’s Economy Minister Tatiana Clouthier called the proposed credit “discriminatory,” and, according to Reuters, the country is already looking into several legal actions it may pursue going forward. Clouthier shared in a recent news conference:

“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.”

The minister went on to say that imposing tariffs was not likely the best plan, though Mexico is willing to do what it needs to in order to protect the automotive industry in the country.

The popular new Ford Mustang Mach-E electric crossover is a US EV that’s eligible for the tax credit, though since it’s produced in Mexico, it may only qualify for a $7,500 or $8,000 credit. If it were built in the US like the Chevy Bolt, it would get $12,500. Keep in mind, this will only prove true if the proposed credit passes with the current language.

There’s a chance the credit won’t pass at all. There’s arguably an even better chance it will eventually pass, though only with notable changes that will work to appease those in opposition of the credit as it currently stands.

The proposed credit is supported by President Joe Biden and the United Auto Workers (UAW). However, it’s opposed by BMW, Daimler, Honda, Hyundai, Tesla, and Toyota.

Clouthier also explained that the proposed credit is “totally contrary to free trade.” Moreover, she noted that it could negatively impact Mexico’s automotive exports, create a loss of jobs, and inevitably “generate additional migratory pressures.”

According to the Reuters story, Mexico already joined the European Union, as well as Canada, France, Germany, Italy, Japan, and South Korea back in October to send a message to the US administration pointing out that the proposed tax credit will breach international trade laws.


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