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

man sitting at desk using a calculator
Auto Financeby Lauren LawrenceAugust 10, 2026

Auto Refi Savings Surge

Consumers with 84-month auto loan terms who refinanced saved the most on monthly payments, according to a new report by auto refinancing provider Caribou.

Read More →
Tiny toy car in front of small stacks of coins
Auto Financeby Hannah MitchellAugust 5, 2026

Subaru Enters Lending Business

The automaker follows other brands in adding captive financing in the U.S., and says the move will strengthen its position here.

Read More →
Man climbing ladder in front of mountain landscape.
Auto Financeby Lauren LawrenceAugust 3, 2026

Positive Equity Reaches Record High

Mainstream vehicle owners who bought a car seven years ago are likely to have positive equity when trading in for a new vehicle, according to second-quarter Edmunds data.

Read More →
Ad Loading...
Photo of document next to calculator and inkpen
Auto FinanceJuly 20, 2026

Dealerships Are Paying the Price for Extended Car Loans

Growing negative-equity scenarios mean such lengthy terms should be addressed in a forward-looking way to make them work for the dealer and the consumer down the road.

Read More →
silver car in background with hand in front holding out a set of keys, Trade-In Trouble, F&I and Showroom
Auto Financeby Lauren LawrenceJuly 20, 2026

Trade-Ins in Negative Equity Reach New Heights

As such trade-ins rise in frequency, so do monthly loan payment amounts and interest rates, according to second-quarter data compiled by Edmunds.

Read More →
Two men in suit jackets shaking hands in front of a new-looking white vehicle
Auto Financeby Hannah MitchellJuly 15, 2026

Auto Credit Plentiful

June numbers show lenders are readily granting access, including to risky borrowers, as consumers leverage themselves to take on high prices.

Read More →
Ad Loading...
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 →