Mexican Economy Minister Tatiana Clouthier gestures during an interview with Reuters in Mexico City, Mexico, on January 11, 2021. REUTERS / Dave Graham

Mexico City, Dec. 2 (Reuters) – A proposed US electric vehicle tax credit is “discriminatory,” and Mexico is analyzing a range of legal measures in response, which may include tariffs, Mexican Economy Secretary Tatiana Clouthier said Thursday.

“In the past we have imposed tariffs and we have to do or propose something very important and strategic for these products, in the places where it harms them … so that the consequences can be felt,” said Clouthier at a press conference.

Clouthier said this was “not a desirable” course of action, but stressed that Mexico would do everything in its power to protect its auto industry, which directly employs around one million people.

US Congress is considering a new $ 12,500 tax credit that would include $ 4,500 on US unionized electric vehicles. US-built vehicles would be eligible for the $ 12,500 loan after 2027, according to a House of Representatives proposal.

Clouthier, who described the measure as “totally contradicting free trade,” had previously reprimanded the United States for pursuing protectionist policies that it described that could backfire and stimulate immigration.

She argued similarly on Thursday, saying, “The impact on our auto exports would have a very big impact on this sector, which could create lots of jobs … and even add additional migratory pressures.”

In late October, Mexico, along with the European Union, Germany, Canada, Japan, France, South Korea, Italy and other countries, wrote to US lawmakers that the proposed electric vehicle tax credit violated international trade rules.

The proposal was supported by US President Joe Biden, the United Auto Workers (UAW) and many Democrats in Congress, but was rejected by major international automakers, including Toyota Motor Corp (7203.T), Volkswagen AG (VOWG_p.DE), Daimler AG, Honda Motor Co, Hyundai Motor Co (005380.KS) and BMW AG (BMWG.DE).

Reporting by Anthony Esposito; Editing by Drazen Jorgic, Cynthia Osterman, Angus MacSwan and Richard Chang

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