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Mexico could impose tariffs on proposed U.S. electric car tax credit

Mexican Economy Minister Tatiana Clouthier gestures during an interview with Reuters in Mexico City, Mexico, on January 11, 2021. REUTERS/Dave Graham

MEXICO CITY, Dec. 2 (Reuters) – A proposed US electric vehicle tax credit is “discriminatory” and Mexico is analyzing a series of response lawsuits that may include tariffs, the Mexican minister said on Thursday of Economics, Tatiana Clouthier.

“In the past we have imposed tariffs and we had to do or come up with something very important and strategic for these products, where it hurts them… so that the consequences can be felt,” Clouthier said during a press conference.

Clouthier said this was “not a desirable course of action,” but stressed that Mexico would do everything in its power to protect its auto industry, which directly employs around one million people.

The US Congress is considering a new tax credit of $ 12,500 that would include $ 4,500 for US electric vehicles made by unions. Only vehicles built in the United States would be eligible for the $ 12,500 credit after 2027, under a House proposal.

Clouthier, who called the measure “totally contrary to free trade,” had previously criticized the United States for pursuing what she described as protectionist policies that could backfire and spur immigration.

She made a similar argument on Thursday, saying that “the effect on our auto s would have a very significant impact on this sector which creates a lot of jobs … and could even generate additional migratory pressures.”

In late October, Mexico, along with the European Union, Germany, Canada, Japan, France, South Korea, Italy and other countries wrote to U.S. lawmakers claiming that the credit for proposed tax for electric vehicles violated international trade rules.

The proposal was backed by US President Joe Biden, the United Auto Workers (UAW) and many Democrats in Congress, but opposed by major international auto makers including Toyota Motor Corp (7203.T), Volkswagen AG (VOWG_p .DE), Daimler AG, Honda Motor Co, Hyundai Motor Co (005380.KS) and BMW AG (BMWG.DE).

Our Standards: Thomson Reuters Trust Principles.

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