Finance Committee Retains EV Tax Credit That Discriminates Against Imported Vehicles
Despite repeated lobbying and threats of tariffs on U.S. exports from Canada and Mexico, the Senate Finance Committee is proposing that a purchase credit for electric vehicles remain more generous for union-made, U.S.-assembled cars and trucks through 2026, and be reserved only for U.S.-made vehicles starting in 2027.
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Imported electric vehicles could receive a $7,500 tax credit, but domestic cars made in union plants could receive $12,000, and if it includes a U.S.-made battery, $12,500. However, this language is not final, as Sen. Joe Manchin, D-W.Va., has been clear he does not accept the richer credit for union-represented factories. It's not known whether he also objects to the American-built requirement. The House already passed Build Back Better, but it's not clear when the Senate might have Manchin on board for a vote.
Mexico first said that it would have to resort to tariffs if the U.S. chooses to discriminate against the Mexican auto industry (see 2112060033). Canada later publicly said the same, and said the list of targets would be released this week (see 2112100073). Mexico also said that such a choice would probably drive more illegal immigration. Canada said that in addition to tariffs, it would no longer expand quotas for dairy exports from the U.S., since the U.S. would not be honoring USMCA with such a discriminatory tax credit. They said that the credit is equivalent to a 34% tariff on Canadian EVs.