Mexico contemplates “all kinds of commercial retaliation” against the US for its “discriminatory” initiative to incentivize electric cars

The Mexican government prepares commercial reprisals against the United States before the bill, already approved by the House of Representatives, which will grant tax incentives for the manufacture of electric cars in the United States, which would violate the trade agreement that both nations maintain together with Canada (T-MEC).

Mexico will use the legal instruments at its disposal to enforce our rights“, announced this Thursday the Secretary of Economy, Tatiana Clouthier, in a virtual press conference.” We are evaluating all kinds of reprisals, “he added.

Clouthier spoke in reference to President Joe Biden’s initiative, called ‘Build Back Better’, which was approved by the House of Representatives on November 19 and passed to the Senate for eventual processing .

Controversial content

The Mexican Ministry of Economy expressed “serious concerns” about the legislative text in relation to the automotive sector, as it is “inconsistent with obligations“of the USA in the T-MEC and with the agreements of the World Trade Organization (WTO).

What’s more, “goes against the spirit of North American productive integration“Clouthier pointed out.

The Government of Mexico manifested in particular its concern about the following contents of the initiative:

  • Proposes a tax credit of up to $ 12,500 for electric vehicles that are assembled in the USA.
  • Establishes $ 500 battery incentives of American-made electric cars.
  • It provides that as of 2027, only electric vehicles that are manufactured in the US “may be eligible to access any of the amounts of the tax credit“.

Clouthier called the initiative “discriminatory”, since it would put Mexican exports of electric vehicles at a disadvantage compared to those produced in the neighboring country. “This tax credit proposal would reduce the competitiveness of the North American auto sector vis-à-vis other regions of the world,” the secretary added.

In Mexico, the automotive sector generates one million jobs. It represents about 4% of the Gross Domestic Product (GDP) and more than 25% of total exports, according to figures from the Ministry of Economy.

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