Mexico threatens legal action on US electric vehicle subsidy

MEXICO CITY (AP) — The Mexican government threatened legal action Thursday over provisions of U.S. President Joe Biden’s Build Back Better Act that would give subsidies of up to $12,500 for purchases of union-made, American-made electric vehicles.

Tatiana Clouthier, Mexico’s secretary of the economy, said the bill currently before the U.S. Senate would violate non-discrimination clauses of the U.S.-Mexico-Canada free trade pact.

Clouthier said the measure would discriminate against potential exports of Mexican-built electrical vehicles and favor domestic producers, something she said is forbidden under the USMCA pact.

“We would apply trade reprisals,” Clouthier said, apparently referring to possible tariffs. “This bill is not consistent with the U.S. obligations under the TMC and the rules of World Trade Organization.”

Mexico's auto industry, made up of plants run by most of the U.S., European and Asian automakers, has been battered by the worldwide chip shortage and the coronavirus pandemic.

Clouthier said the Senate bill could cost Mexico jobs and “could generate additional pressures for migration.”

The bill is expected to come up for a vote in the Senate in mid-December. According to a White House statement, “the framework’s electric vehicle tax credit will lower the cost of an electric vehicle that is made in America with American materials and union labor by $12,500 for a middle-class family.”

It was the latest trade flashpoint between the two countries. The United States is concerned Mexico is trying to favor its own state-owned electrical power plants.

In November, U.S. ambassador to Mexico Ken Salazar said the United States has “serious concerns” about the Mexican government’s attempts to limit competition in the electrical power sector.

Mexican President...