Canada threatens U.S. with tariffs, partial suspension of CUSMA over electric vehicle tax credit – by Peter Zimonjic (CBC News Politics – December 10, 2021)

Deputy PM Chrystia Freeland and International Trade Minister Mary Ng made threat in letter to U.S. senators

Deputy Prime Minister Chrystia Freeland has written to top U.S. senators threatening to suspend parts of the CUSMA trade agreement and impose tariffs on American goods unless U.S. officials back away from a proposed tax credit for American-built electric vehicles.

“We are deeply concerned that certain provisions of the electric vehicle tax credits as proposed in the Build Back Better Act violate the United States’ obligations under the United States-Mexico-Canada Agreement,” Freeland and International Trade Minister Mary Ng say in the letter.

“The proposal is equivalent to a 34 per cent tariff on Canadian-assembled electric vehicles,” the letter says. “The proposal is a significant threat to the Canadian automotive industry and is a de facto abrogation of the USMCA.”

The Canada-U.S.-Mexico Agreement (CUSMA) is known as the United States-Mexico-Canada Agreement (USMCA) in the United States. Congress is proposing sizeable tax credits worth up to $12,500 US to buyers of new electric vehicles — as long as those cars are manufactured by union workers in the U.S.

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