Republicans on Finance Committee, Biden at Odds Over How to Encourage EV Adoption
All 14 of the Republicans on the Senate Finance Committee are telling colleagues in their chamber that providing a $12,500 incentive to purchase union-made, U.S.-assembled electric vehicles will spur foreign retaliation against American auto exports. The House version of Build Back Better offers a $7,500 refundable tax credit for any electric vehicle purchase -- the same amount as current law, but makes it refundable and does not phase it out for leading manufacturers. Currently, Tesla and General Motors vehicles are no longer eligible for the credits. But in order to receive $12,500, the car or truck would need to include a U.S.-assembled battery and be made by union workers in the United States.
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The Republicans, led by ranking member Mike Crapo, R-Idaho, wrote Jan. 25 that initially giving more generous credits to U.S.-built cars, and eventually limiting the credits to U.S. vehicles would drive a wedge between the U.S. and other countries that sell cars here, allies like Canada, Mexico, Germany, Japan and South Korea. "No less than 25 Ambassadors have told Congress that those provisions violate U.S. trade obligations," they wrote. Canada had said that if only U.S. built cars qualified for the credit (starting in 2027), it would bring a dispute under USMCA, and impose retaliatory tariffs against U.S. automotive exports (see 2112100073). Crapo had previously said he opposed this credit (see 2112150037).
"Annual EV exports from U.S. plants in 2020 exceeded 215,000 vehicles, the most of any single nation. The adoption of Build Back Better’s proposed EV credit scheme threatens the United States with retaliation from our allies for breaching trade rules, and also encourages our trading partners to adopt similar schemes to the detriment of our own industry. Obvious contempt for our trade obligations does a disservice to American workers, who bear the brunt of the consequences."