Biden’s electric car plan could spark trade dispute

Joe Biden’s proposed incentives for US electric car buyers could be challenged under the North American trade pact, a Canadian auto industry leader has warned.

The White House plan, released Thursday as part of the president’s latest budget package, would offer buyers of vehicles made by unionized American workers an additional $ 4,500 credit on top of the $ 7,500 available for vehicles produced by all manufacturers.

If approved, the plan would create “a discriminatory tariff based on the country of origin“Which goes against”the principles and terms of the Agreement between the United States, Mexico and Canada”He said in an interview Flavio Volpe, President of the Auto Parts Manufacturers Association of Canada.

The plan could also backfire on the US auto sector, he said. Volpe, by exempting these cars assembled in the country from the North American content rules.

According to the trade pact, vehicles can be sold throughout the region without tariffs only if 75% of their components are manufactured in USA, Mexico and Canada. But since these subsidized vehicles will be left out of the deal, manufacturers will not have an incentive to purchase materials domestically. American manufacturers could source parts and other materials from lower-cost suppliers in Asia, he said. Volpe.

“It’s really awkward politics”He said on Friday by phone.

Volpe wait how much Canada What Mexico file a dispute under the T-MEC, and that could take years to resolve at a time when “very important investment decisions are being made”.

“It’s a big problem for us“, Held.

Last week, Commerce Minister Justin Trudeau raised Canada’s concerns about the protectionist nature of the proposal in a letter addressed to Biden Administration officials and congressional leaders from both parties.

“What I hope is that someone lights a lightbulb in Washington and understands the damage they are about to do to the American parts industry, the American tool industry and the American raw materials industry.“, said Volpe.