Trudeau proposes to the United States a harmonization of tax benefits for electric cars

Canadian Prime Minister Justin trudeau He proposed that the United States harmonize the tax benefits granted to the electric vehicle industry, in order to avoid a commercial conflict with Washington, whose subsidy plan threatens the Canadian automotive sector.

His statement comes after the threat of new tariffs on American products and the suspension of parts of the North American free trade agreement, if Washington goes ahead with tax breaks for electric vehicles produced with unionized labor in the United States.

“Canada and the United States have made cars for more than 50 years. Our supply chains are deeply integrated,” Trudeau said.

“That is why we work very hard with the United States so that they understand that this tax cut for their electric vehicle industry is obviously not good for Canada, but not for the United States either,” he said.

Trudeau added that “several solutions” have already been proposed to Washington, including “aligning the incentives in Canada and the United States to ensure that there are no unfair advantages for either side.”

The proposed US subsidy is included in President Joe Biden’s $ 1.75 trillion budget plan, pending approval in Congress.

This plan proposes boosting the production of electric vehicles in the United States by offering a greater tax reduction to those manufactured in the United States by companies with unions.

In a letter to US senators on Friday, the Canadian Deputy Prime Minister, Chrystia Freeland, said that this tax reduction is equivalent to imposing a 34% tariff on electric vehicles assembled in Canada.