Canada threatens tariffs on US goods
Reason: Planned tax credit for electric vehicles
In the dispute over the US proposed credit for electric vehicles, Canada on Friday drastically tightened its tone against Washington and threatened to impose tariffs on a number of American goods if the matter is not resolved.
In a letter to senior members of the US Senate, Treasury Secretary Chrystia Freeland and Secretary of Commerce Mary Ng also stated that Canada is ready to initiate a dispute settlement process under the US-Mexico-Canada Trade Agreement (USMCA).
Canada fears the tax credit for American manufacturers will undermine its own efforts to produce electric vehicles in Ontario - the country's industrial heartland - as well as the integrated North American auto industry.
"The letter stated that Prime Minister Justin Trudeau's government did not want a confrontation.
Unless the matter is resolved, "Canada will have no choice but to react forcefully by ... imposing tariffs on American exports that will affect American workers in the automotive and several other sectors of the US economy." "continued the two ministers.
In previous trade disputes between the two close neighbors and trading partners, both sides have imposed sanctions on a wide range of goods.
Ottawa is preparing to release a list of US products that could face Canadian tariffs, Freeland and Ng said, adding that Canada could also suspend milk quotas for US producers it faces under the USMCA agreed, it says in the letter.
Months of lobbying barely stopped U.S. lawmakers from considering a new $ 12,500 tax credit, which would include $ 4,500 on union-made U.S. electric vehicles.
In the letter, Freeland and Ng said the proposal would amount to a 34% tariff on Canadian-made EVs and pose a significant threat.
The White House states that President Joe Biden considers tax credits a personal priority and that the government does not see them as a violation of the USMCA. Officials have said they hope to resolve the dispute with both Canada and Mexico, which are also opposed to the tax credits.
Last Friday, Ng had said that Canada still had some leeway before the vote in the US Senate.
When asked why Canada had tightened its tone, Ng spokeswoman Alice Hansen said, "We have always made it clear that we will stand up for the Canadian auto industry. This is the next step."