Canada has escalated tensions in its electric vehicle (EV) dispute with the United States, warning of retaliatory tariffs and trade concessions reversal if Congress passes a tax credit for U.S.-made electric vehicles. Deputy Prime Minister Chrystia Freeland and Trade Minister Mary Ng issued a stern letter to Senate leaders, citing violation of the USMCA and the historic partnership between the countries in vehicle manufacturing. Threatening a 34% tariff on Canadian-assembled EVs, they emphasize the importance of the issue to Canada's automotive sector. The letter targets key senators, including Joe Manchin, whose support is crucial for President Biden's Build Back Better bill containing the EV tax credit. The standoff echoes Canada's response to previous trade disputes and signals Ottawa's seriousness in defending its interests. White House spokesperson Jen Psaki defends the bill amidst concerns over inflation. The letter suggests granting similar tax relief to Canadian-assembled vehicles as a potential resolution while also hinting at reversing dairy concessions made under USMCA if the tax credit is passed.
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