FI showroom red and grey logo
MenuMENU
SearchSEARCH

Canada Suggests Proposed U.S. EV Tax Credit Will Harm North American Auto Industry

Letter penned by Canadian Trade Minister Mary Ng suggest proposed EV tax credits will harm North American auto industry and violate trade agreements.

October 26, 2021
Canada Suggests Proposed U.S. EV Tax Credit Will Harm North American Auto Industry

Canadian officials say U.S. proposals to create new electric vehicle tax credits for American-built vehicles could violate trade agreements.

Credit:

Creative Commons

2 min to read


 

Canadian officials say U.S. proposals to create new electric vehicle (EV) tax credits for American-built vehicles could harm the North American auto industry and violate trade agreements, according to a letter seen by Reuters.

Reuters also followed this with a statement from a Canadian government source, who expressed confidence that the countries could eventually reach a solution. However, the source also noted Ottawa may need to launch a challenge through the United States-Mexico-Canada (USMCA) trade deal.

Ad Loading...

In the letter to U.S. lawmakers and the Biden Administration, Canadian Trade Minister Mary Ng said that the credits, if approved, “would have a major adverse impact on the future of EV and automotive production in Canada.”

She stressed the move will raise the risk of severe economic harm and tens of thousands of job losses in one of Canada's largest manufacturing sectors. Ng also suggested U.S. companies and workers would also be affected as the auto industries of both nations are highly integrated.

According to Ng, the proposed credits are also inconsistent with U.S. obligations under the USMCA and the World Trade Organization.

The Canadian government source, who requested anonymity in the Reuters article, indicated Ottawa did not want to mount a USMCA challenge but said “it is entirely conceivable that that's a tool we would look at” if need be.  

A U.S. House panel approved legislation to boost EV credits to up to $12,500 per vehicle, allocating $4,500 for union-made vehicles produced in the United States and $500 for U.S. produced batteries made. Under the proposal, vehicles would need to be assembled in the United States as of 2027 to qualify for all of the proposed tax credits.

Ad Loading...

The credits also would disproportionately benefit Detroit’s Big Three automakers - General Motors, Ford Motor Co., and Chrysler parent Stellantis. These automakers assemble their American-made vehicles in union-represented plants.

GM, Ford and Stellantis have announced plans to make EVs at factories in Ontario.

The U.S. divisions of foreign automakers also criticize the tax incentive. Tesla also criticizes the move that is strongly supported by the United Auto Workers union.

The Canadian government source reports Cabinet ministers plan to step up their lobbying efforts.

“We will eventually reach a resolution … Ideally we would be able to change the legislation before it gets passed,” said the source.

Ad Loading...

Ng expressed concerns over the “protectionist elements" of the proposed tax credits, saying they discriminate against EVs and parts produced in Canada.

“Canada is also necessary for the United States to achieve its electric vehicle objectives in the future,” she wrote. She also noted that Canada is the only country in the Western Hemisphere that has all critical minerals required to manufacture EV batteries.

Originally posted on Auto Dealer Today

More Auto Finance

Woman's hands holding an wallet empty of cash
Auto Financeby Hannah MitchellJuly 1, 2026

Automotive Consumers Sink Further in Debt

Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.

Read More →
Three men smiling for headshots
Auto Financeby Lauren LawrenceJuly 1, 2026

Porsche Financial Services Shifts Structure

After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.

Read More →
$100 bill and magnifying glass on top of paper that says insurance policy terms and conditions.
F&Iby Lauren LawrenceJune 29, 2026

Tariffs Could Raise Insurance Premiums

As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.

Read More →
Ad Loading...
Red toy car sitting on top of coins.
Auto Financeby Lauren LawrenceJune 24, 2026

Smaller Loans, Longer Terms

The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.

Read More →
Photo of man holding a car key
Auto Financeby Hannah MitchellJune 17, 2026

New Cars a Tad More Affordable

May averages show that combined circumstances gave auto consumers slightly better buying power for the month, though average prices were up year-over-year.

Read More →
Photo of a white toy car next to piles of coins
Auto Financeby Hannah MitchellJune 8, 2026

First-Quarter Sees Long Auto Loan Growth

Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.

Read More →
Ad Loading...
Assurant, Mastering Credit Friction, Sales Series, Expert Trainer Josh Krach
Auto FinanceMay 29, 2026

Mastering Credit Friction

In this video, Josh Krach explains how to turn credit friction into an advantage.

Read More →
Couple talking with auto salesman next to new car inside dealership
Auto Financeby Hannah MitchellMay 20, 2026

April Less Affordable

Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.

Read More →
Photo of a loan contract on a desk
Auto Financeby Hannah MitchellMay 13, 2026

Auto Lenders, Consumers on a Tightrope

April borrowing data shows that more consumers are bending over backward to buy vehicles, though subprime lending cooled off for the month.

Read More →
Ad Loading...
black background with orange text saying Alec Hagey Toyota Financial Services President and CEO effective April 6 with picture of Alec Hagey
Auto Financeby Lauren LawrenceApril 6, 2026

Toyota Financial Services President Replaced

Scott Cooke has served in various roles with Toyota Financial Services for over 20 years, including president and CEO, which he retires from on June 30.

Read More →