Innovation and Industry Minister Francois-Phillipe Champagne noted that the Government of Canada would respond “appropriately” to proposed EV tax credit legislation in the United States.
The proposed legislation provides a$4,500 incentive for union-made US vehicles and a $500 credit for US-made batteries.
Starting in 2027, vehicles made only in United States would qualify for the tax credit.
The EV tax credits are part of broader social spending and climate bill working through the House of Representatives.
The Bill could be voted on in the House as soon as today’s sitting.
Champagne notes that the tariffs would run against the rules of the CUSMA and the World Trade Organization.
In addition, Government to Government advocacy has already started. Canada’s Foreign Minister Melanie Joly discussed the tax credits with her counterpart, the Secretary of State, on Wednesday, reports Reuters.
The move is interesting as Canadian and American automotive plants have long worked in tandem. The Canadian plants produce roughly 1 million vehicles per year for the US market.
These vehicles contain 50% US parts and 60% US raw material.
In addition, three plants in Canada already have plans to start producing EVs in the next few years for the North American market.