Mexico compares Biden’s electric car tax credits to Trump’s tariff threat
Mexico steps up pressure against electric vehicle (EV) tax credits for American-built cars, a move in President BidenJoe BidenMan Sentenced to Nearly Four Years for Carrying Out Trump Scam, Biden PACs Dole in Last Column: âToo Many of Us Have Sacrificed Too Muchâ Meadows Says Trump’s Blood Oxygen Level Was Perilously Low when he had COVID-19 PLUSthe signing of the Build Back Better bill that some Mexican officials compare to the old President TrumpDonald Trump Man Sentenced to Nearly Four Years for Leading Trump Scam, Biden PACs Meadows Says Trump’s Blood Oxygen Level Was Perilously Low When He Had COVID-19 Trump Endorses David Perdue in Governor Race from Georgia PLUSthreatens to impose tariffs on Mexico.
The Mexican government is actively lobbying against the tax credits, claiming they violate the United States-Mexico-Canada (USMCA) trade agreement by giving undue advantages to vehicles built in the United States.
The Canadian government is also lobbying against tax credits, which were included in the version of the bill passed by the House.
“This measure could be equivalent to an even higher tariff than that proposed by President Trump,” said Luz MarÃa de la Mora, undersecretary for foreign trade at Mexico’s Secretariat of the Economy.
âPresident Trump at the time proposed to implement a national security measure to impose a 25% tariff on all imports into the United States. This proposed measure could be equivalent to a tariff higher than the 25% that Trump was proposing at the time and which we all thought was a crazy idea, âadded de la Mora.
Trump in 2019 threatened Mexico with tariffs of up to 25% on its products if migration through Mexico to the United States does not decrease.
This threat was ultimately quelled by a bilateral migration deal and the pandemic’s effects on regional migration, but it has thrilled the continent’s integrated supply chains.
The House-passed version of Biden’s climate and social spending bill includes the proposed tax incentive, which would increase EV credits to $ 12,500 per vehicle, plus $ 500 for batteries. of American-made EV.
The $ 12,500 credit would include a credit of $ 4,500 for unionized vehicles.
The tax credits would begin in 2027 and apply to electric vehicles assembled in the United States with at least 50% of parts manufactured in the United States.
The value of tax credits could represent up to one-third of the selling price of a vehicle that qualifies for the credits, compared to one that does not.
The measure drew criticism from Canada, Mexico and Tesla Motors Elon muskElon Reeve Musk US-China space cooperation is more on hold than ever Joe Biden’s Big Labor push fails voters Elon Musk warns SpaceX employees of the risk of bankruptcy if Starship engine production fails ‘not increase: PLUS report, whose company is a leader in the production of electric vehicles, but does not have a unionized workforce.
Still, de la Mora hailed the tax credit’s intention to speed up the electrification of private transport.
âI think it is very legitimate that we are looking for a way to move towards electric vehicles and towards electromobility. This question is not for discussion, it is not questioned that the industry is moving in this direction, âsaid de la Mora.
âAnd if it’s done with the help of tax incentives, we don’t disagree either. What we disagree with, which worries us, is that these tax incentives are conditional on the production of vehicles in the United States, âshe added.
Mexico and Canada view the home country conditions for the tax incentive as an undue subsidy unlike the USMCA.
The United States trade representative did not respond to a request for comment on this story.
Mexican Secretary of the Economy Tatiana Clouthier told reporters last week that Mexico would argue the disposition in its domestic courts, as well as under USMCA and World Organization dispute resolution rules. Trade.
âWe are evaluating all kinds of retaliation,â Clouthier said.
Mexico’s response was swift and brusque in part because the auto industry is the hallmark of North American economic integration, with supply chains spanning the continent, relatively unencumbered by international borders. .
The auto industry employs nearly a million workers directly in Mexico, the vast majority of whom work in the production of auto parts which are then assembled into the final product at factories across the continent.
But the Mexican government was also surprised by the inclusion of tax credits in the 2,000-plus-page Build Back Better bill, with no significant hindsight from the large congressional contingent who are generally wary of disrupting the continental trade.
âWe are surprised that the United States Senate treats its major trading partners, Mexico and Canada, in this way. The truth is, we are not expecting this treatment from them, âsaid de la Mora.
And Mexican officials are angered by the proposal’s timeline, after Mexican President AndrÃ©s Manuel LÃ³pez Obrador opened his participation in the North American Leaders’ Summit last month with a geopolitical defense of North American economic integration.
“Economic integration, with full respect for our sovereignty, is the best instrument to face the competition arising from growth in other regions of the world, in particular the productive and commercial expansion of China,” said LÃ³pez Obrador told Biden and the Canadian Prime Minister. Justin trudeauJustin Pierre James TrudeauCanadian Senator Dies After Hospitalization With COVID-19 Photos of the Week: President Biden, the Kenosha Protests, and a Peanut Butter Pardon The Hill’s Morning Report – Presented by ExxonMobil – House to vote on Biden’s social spending bill after McCarthy’s delay MORE, adding a warning about China’s growing economic footprint relative to that of North America.
“If the trend observed over the last decade were to prevail for the next 30 years, by 2051 China would represent 42% of the world market and the United States, Mexico and Canada would retain only 12%. , which would not only constitute an unacceptable disproportion. in the economic sphere, this would maintain the temptation to bet on resolving the disparity with the use of force, which would put us all at risk, âsaid LÃ³pez Obrador.
Both Clouthier and de la Mora have said Mexico is actively lobbying members of the House and Senate to advocate for a change of language before it becomes law.
Because of the scope of the bill, the danger for Mexico’s case is that the wording of the provision could be overlooked as Democrats haggle over more politically important issues.
The electric vehicle tax credit is a long-term prospect, as it’s written to take effect in 2027, and internal combustion vehicles still account for over 90% of global auto sales.
This could lessen the effect of the provision on Mexico and Canada if the Build Back Better law is passed this year, as the Democratic leadership in the Senate wants.
But the long-term effects of the move, according to the Mexican government, could weaken the economies of the three countries in an increasingly competitive and regionalized global economy.
âBy dislocating supply chains in an iconic sector that generates great opportunity in all three countries, we are working against a competitive and integrated North America,â said de la Mora.