Canada will respond to tax credits for U.S.-made EVs if approved: Champagne

"They understand that legislation like that would generate a response on the Canadian side," Innovation and Industry Minister Francois-Philippe Champagne said.

Canada would respond “appropriately” to proposed U.S. electric vehicle tax credits for American-built vehicles, which it says would harm workers on both sides of the border, Innovation and Industry Minister Francois-Philippe Champagne said on Thursday.

Champagne, who previously served as foreign minister for Prime Minister Justin Trudeau, met with U.S. Commerce Secretary Gina Raimondo, White House Science Advisor Eric Lander and Michigan Senator Gary Peters in Washington this week.

“They understand that legislation like that would generate a response on the Canadian side,” Champagne told Reuters in a telephone interview from Washington. “We have always responded appropriately to these types of legislation.”

The House of Representatives could vote as early as Friday on a social spending and climate bill that includes a $4,500 incentive for union-made vehicles and $500 for U.S.-made batteries. Vehicles would have to be made in the United States starting in 2027 to qualify for any of the $12,500 credit.

Champagne said the tariffs would run against the rules of the North American trade agreement — the USMCA — and World Trade Organization.

They “would be really contrary to the spirit … of what we have been trying to achieve with our American colleagues,” which is a joint effort to pivot toward greener technologies to fight climate change, Champagne said.

“My message to (U.S. officials) is that a decision like that… would impact jobs on both sides of the border, and at a time where we need to work closely together with respect to critical minerals with respect to the battery ecosystem,” Champagne said.

“The response has been an understanding of the impact that the proposed legislation could have,” he added.