Finance Ranking Member Says EV Subsidies Should Comply With USMCA

The ranking member of the Senate Finance Committee said Congress should take into consideration how an electric vehicle subsidy limited to American-assembled vehicles affects the trading relationships in North America, but Sen. Mike Crapo, R-Idaho, acknowledged that Republicans' views on the Build Back Better bill are irrelevant, since none of them plan to vote for it. The House version of Build Back Better gives a richer purchase incentive for U.S.-made cars from union plants, and for U.S.-origin batteries, and then limits the tax credit to U.S.-assembled cars starting in 2027.

Crapo, who was answering a question from International Trade Today during a press conference at the Capitol, said, "Unfortunately, we are not being listened to by the administration on that [electric vehicle subsidy] or on virtually any issues we have with the bill. This is a cram down."

"With regard to what our policy should be for American-made vehicles, I'm all in favor of supporting American-made policies," he said, but he added that trade agreements such as USMCA create legal, enforceable parameters around those kinds of preferences.

"And this goes far beyond vehicles. We need to stay within those legal, binding agreements that we have. And you are right, I've been contacted personally. I think every member of Congress has been contacted personally, by the governments of Mexico and Canada, who are alarmed at what we are doing in this legislation that will violate our relations with them on trade," he said.

Reuters reported this week that Canada is considering offering large purchase incentives for electric vehicles, and if it gives preference to U.S.- or Canadian-assembled vehicles, it's hoping that the U.S. would reciprocate by allowing Canadian factories into the program.