Canada threatened on Friday to impose tariffs on US products, as well as to suspend parts of a trade agreement historic, if Washington goes ahead with its proposal to favor US-made electric cars with union labor.
In a letter to US senators, Canadian Deputy Prime Minister Chrystia Freeland wrote that Ottawa is “deeply concerned” about the president’s electric vehicle tax relief proposal. Joe Biden within the framework of his legislative project “Build Back Better”, which would violate the trade agreement between the United States, Mexico and Canada.
The proposed tax relief is equivalent to 34% of the tariff on electric vehicles assembled in Canada, Freeland said, and applying it is “a significant threat to the Canadian auto industry and is a de facto repeal of the T-MEC (trade agreement between the three countries) “.
The proposal, included in President Joe Biden’s $ 1.75 trillion budget package pending in Congress, favors US production by offering a greater tax advantage for electric vehicles (EVs) produced by union labor, as well as the phase-out of imported EVs after five years.
Mexico and Canada argue that this threatens the integrated supply chain in North America, enabled by the T-MEC, an agreement signed in 2020 after lengthy negotiations.
Non-unionized manufacturers, with Toyota Y Tesla At the helm, they also resist Biden’s proposal, calling it an endorsement of the United Auto Workers union, which could slow the transition to the electric cars.
If the measure passes, Freeland says Canada it will in turn impose new retaliatory tariffs on the US auto industry and other economic sectors.
Freeland added that a list of US products that could face new taxes would be released in the coming days.
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Reference-www.eleconomista.com.mx