Canada to US on EV tax credits: ‘No choice but to forcefully respond’ if passed
Canada to the United States: ‘We are not willing to be bullied’ by the administration
Canada has been steadfast in its opposition to President Donald Trump’s auto industry tariffs, and has warned the United States that trade action south of the border could prompt retaliation.
Canada said on Monday it would implement the toughest measures in its protectionist playbook if the US government eventually implements the tax credits for plug-in vehicles it proposed last week.
“This is the final chapter in trade talks with the United States and we are not willing to be bullied by the administration,” Canadian finance minister Bill Morneau said in a statement.
In response to Trump’s imposition of tariffs of 25% on steel and 10% on aluminum in early March, Canada has imposed tariffs on US-made steel and aluminum and the threat of taxes on billions of dollars worth of US imports.
“If the US Congress ultimately passes tax credit legislation, we are not willing to be bullied by the Trump administration,” Morneau said.
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Last week, the US Department of Commerce proposed to impose a 10% tax on the sales of certain passenger vehicles and light trucks, which would be offset by a $7,500 credit for each battery-electric or plug-in hybrid vehicle.
Morneau said his government is preparing a range of measures to support the Canadian auto industry in the event the tax credit is not rescinded.
The US auto industry is lobbying Congress to find an alternative solution and Guillaume Bérubé, General Motors’ executive vice-president of global product development, said there were strong reasons for preserving the credit.
“With a 20% or 30% difference in prices between our electric cars and the rest of the market, it is important that we are out there promoting our vehicles and helping to drive up the adoption of this technology,” Bérubé said on Sunday in an interview with Bloomberg TV.
Last year, the United States and Canada reached the current exemption on the tax credit, but a car coming from Canada, or produced there in some cases, is no longer eligible for a tax credit once its original tariff is applied.
The union representing Canada’s auto workers, Unifor, has accused the government of caving to pressure from Trump to agree to tougher trade terms as trade talks continue.