Photo: Secretaría de Economía del Gobierno de México
The union-based EV tax credit the Joe Biden administration wants to approve is still under discussion in Congress, but reactions against it keep building up. The latest one came from the Mexican government. The Mexican Economy Minister Tatiana Clouthier said on December 2 that the tax credit is “totally contrary to free trade” and promised to impose tariffs should it be approved.
Clouthier said that in a news conference that Reuters attended. According to the minister, the $4,500 incentive for vehicles built by unionized American factories is clearly protectionist, which would require Mexico to strike back with tariffs. Clouthier said she knew this was not a desirable course of action. However, Mexico had to do everything in its power to preserve its automotive industry, which created more than 1 million direct jobs.
Another argument Clouthier used was that any issue with these jobs would intensify immigration waves toward the U.S. Too bad if these workers end up in factories that are not unionized on American soil. Multiple automakers have already said that the $4,500 incentive is discriminatory and that it would be unfair with workers that voluntarily decided not to unionize. The tax credit would make that become compulsory.
The Biden administration may insist on getting this approved even with all those arguments against it. However, it may backfire spectacularly. Mexico joined Canada, France, Germany, Italy, Japan, the European Union, South Korea, and other countries in October. They officially told the U.S. government that the proposed EV tax credit violates international trade rules.
If it gets approved, all these countries will fight the decision in WTO (World Trade Organization). There’s a big chance that the organization will agree with those countries and impose trade sanctions against the U.S. For a measure that wants to make America great in electric mobility, the sanctions may impose a burden with precisely the opposite effect.
So far, no argument demoted the discussion or the will to approve this union-based incentive. We’ll probably see it approved and condemned by international trade organizations because it seems more of a political statement than anything else. We’ll tell you if anything changes.
Another argument Clouthier used was that any issue with these jobs would intensify immigration waves toward the U.S. Too bad if these workers end up in factories that are not unionized on American soil. Multiple automakers have already said that the $4,500 incentive is discriminatory and that it would be unfair with workers that voluntarily decided not to unionize. The tax credit would make that become compulsory.
The Biden administration may insist on getting this approved even with all those arguments against it. However, it may backfire spectacularly. Mexico joined Canada, France, Germany, Italy, Japan, the European Union, South Korea, and other countries in October. They officially told the U.S. government that the proposed EV tax credit violates international trade rules.
If it gets approved, all these countries will fight the decision in WTO (World Trade Organization). There’s a big chance that the organization will agree with those countries and impose trade sanctions against the U.S. For a measure that wants to make America great in electric mobility, the sanctions may impose a burden with precisely the opposite effect.
So far, no argument demoted the discussion or the will to approve this union-based incentive. We’ll probably see it approved and condemned by international trade organizations because it seems more of a political statement than anything else. We’ll tell you if anything changes.
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