WASHINGTON — Prime Minister Justin Trudeau says Canada would “align” its personal electric-vehicle incentives with these south of the border if Canadian-built vehicles and vehicles might be made eligible for proposed U.S. tax credit.

Trudeau says the 2 international locations have been constructing vehicles collectively for greater than 50 years — an alliance threatened by President Joe Biden’s efforts to spice up gross sales of automobiles made within the U.S. with union labour.

Deputy Prime Minister Chrystia Freeland and Commerce Minister Mary Ng warned Congress final week of retaliatory tariffs and different punitive measures if the tax-credit proposal turns into regulation.

In a letter launched Friday, Freeland and Ng proposed making Canadian-assembled automobiles and batteries eligible below the U.S. plan, which might be value as much as US$12,500 in tax credit to a would-be automobile purchaser.

Trudeau’s feedback, nonetheless, recommend Canada may supply a comparable bundle that may apply to automobiles assembled in both nation.

The federal authorities is already planning to retool its present rebate program, which solely applies to new zero-emission automobiles with a most base worth of between $45,000 and $55,000.

Throughout the federal election marketing campaign, the Liberals promised to spend $1.5 billion over the following 4 years to increase this system in an effort to get extra electrical automobiles on the highway.

“We’re working very onerous with the USA on getting them to know that this proposed EV rebate for American-built vehicles solely isn’t good, clearly, for Canada, but in addition not good for the USA,” Trudeau advised a information convention.

“There are a variety of options we have put ahead. Considered one of them can be to align our incentives in Canada and in the USA, to be sure that there isn’t a slippage or no unfair benefits on one facet or the opposite. We’re completely satisfied to do this.”

The letter Friday was addressed to key members of the U.S. Senate, which is predicted within the coming weeks to vote on the Biden administration’s $1.75-trillion local weather and social-spending bundle, which incorporates the brand new EV tax credit.

The proposal quantities to a 34 per cent tariff on electrical automobiles assembled in Canada and violates the phrases of the U.S.-Mexico-Canada Settlement, or USMCA, Freeland and Ng wrote _ to not point out the affront it represents in a rustic that is been a U.S. accomplice in constructing vehicles and vehicles for half a century.

“We wish to be clear that if there isn’t a passable decision to this matter, Canada will defend its nationwide pursuits, as we did once we had been confronted with unjustified tariffs on Canadian metal and aluminum,” the letter reads.

It promised a forthcoming record of U.S. merchandise Canada is ready to focus on with tariffs, each inside the auto sector and past.

Senate Majority Chief Chuck Schumer needs a vote on the laws, which was already permitted by the Democrat-controlled Home of Representatives, earlier than Christmas. Few see the timeline as reasonable, particularly after new financial information Friday pegged the inflation fee at 6.8 per cent.

Autos in-built Canada comprise about 50 per cent U.S. content material, stated the letter from Ng and Freeland, with greater than $22-billion value of American auto components being imported by Canadian producers yearly.

“To be clear, we don’t want to go down a path of confrontation,” the letter reads. “That has not been the historical past of the connection between our two international locations _ nor ought to it’s the long run.”

The letter additionally threatens to hit the pause button on sure concessions Canada has already made to U.S. dairy producers below USMCA, arguing that the EV tax credit would comprise “a big change within the steadiness of concessions” agreed to below the deal.