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Opinion On electric cars, President Biden should meet Mexico and Canada halfway

A 2022 Jaguar I-PACE electric vehicle on display at AutoMobility LA ahead of the Los Angeles Auto Show in Los Angeles on Nov. 18. (Bing Guan/Bloomberg)
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Between 2017 and 2021, President Donald Trump’s policy toward the United States’ next-door neighbors, Mexico and Canada, careened between gratuitous antagonism and constructive engagement. Mr. Trump slapped tariffs on Mexican and Canadian steel and aluminum, and even engaged in personal sniping with the latter country’s prime minister, Justin Trudeau. At the same time, he managed to renegotiate a long-standing trilateral free-trade agreement, leaving it mostly intact despite having campaigned against it as “perhaps the worst trade deal ever made.” So, President Biden was well advised to stabilize North American diplomacy, which he did by inviting Mr. Trudeau and Mexican President Andrés Manuel López Obrador to Washington this week. The North American Leaders’ Summit resumed what had been a regular series of meetings from 2005 until the Trump presidency, during which there were none.

Perhaps this improvement in atmospherics will help resolve the many issues of substance that remain among the three countries — migration, cross-border drug traffic, the crisis in Cuba — even if this week’s get-together itself did not produce answers. Mr. López Obrador’s hands-off position toward the increasingly repressive Cuban dictatorship represents a troubling regression to one of the worst aspects of his country’s traditional noninterventionist foreign policy. Yet on the most contentious matter, Mr. Biden, Mr. Trudeau and Mr. López Obrador discussed — trade — Mexico and Canada have a point.

Specifically, the two countries complain that a proposed new federal tax credit for the purchase of electric cars would discriminate unfairly against Mexican and Canadian auto manufacturing, possibly in violation of the new free trade deal. The incentive would be up to $7,500 for all vehicles, regardless of origin, for five years after the bill is enacted, according to the House draft of the Build Back Better bill — but only for made-in-America models during the next five years. Moreover, for the entire 10 years, buyers get an additional $4,500 to purchase cars made in the United States by workers represented by the United Auto Workers. This large thumb on the scale for U.S.-built EVs constitutes an obvious disadvantage for both Canada and Mexico, the latter of which now ranks sixth among all car-producing nations. One model produced there is Ford’s newest electric, the Mustang Mach-E.

This artificial constraint on what should be a seamless hemispheric flow of trade is especially gratuitous given the toughened provisions to benefit U.S. auto manufacturers written into the renegotiated U.S.-Mexico-Canada Agreement trade deal under Mr. Trump. The collateral damage could extend to European, Japanese and Korean firms, which is why 25 ambassadors wrote a letter of protest to Congress and the administration on Oct. 30. It’s impossible to square the bill’s blatantly protectionist purposes with the more pressing goal — fighting climate change — of the electric-vehicle transition. That purpose calls for offering Americans the widest variety of cars at the lowest possible cost.

In response to Mexican and Canadian complaints, White House press secretary Jen Psaki told reporters, unconvincingly, that “It’s not the first time that there have been incentives and tax credits for consumers — lower prices for consumers [and] help incentivize a move towards a clean energy industry.” A level playing field would be more neighborly — and better policy.