Canada proposes deal to align electric vehicle credits with U.S.

Prime Minister Justin Trudeau says Canada has put forward “a number of solutions” for resolving its complaint over a proposed U.S. tax incentive on electric vehicles made only by unionized American workers.

Canada has slammed the tax credit as a violation of the North American trade pact between the Canada, U.S. and Mexico, saying it amounts to unraveling five decades of integration in the auto sector.

Trudeau, speaking Monday in Ottawa, said one option is to align electric-vehicle incentives in Canada and the U.S. “to make sure that there’s no slippage or no unfair advantages on one side or the other.” He added that conversations on how to solve the dispute are ongoing between the two sides right now.

On Friday, Canada sent a letter to U.S. Senate leaders threatening to levy targeted tariffs on U.S. goods and take other retaliatory measures under the USMCA trade deal if its concerns aren’t addressed. 

The proposed tax incentive is a part of the $1.75 trillion Build Back Better Act currently before the U.S. Senate. A version of the bill that was approved by the U.S. House calls for all automakers to be able to offer $7,500 to consumers for EV purchases for the first five years of the law. But cars made in the U.S. by union-represented workers would be allowed an additional $4,500 in credits under that bill, to the consternation of Mexico and Canada.