Mexico’s Economy Minister Calls for BBBA Rejection

Minister of Economy Tatiana Clouthier asked Mexican residents in Los Angeles to tell their Senate Representatives to vote against President Joe Biden’s “Build Back Better Act,” as its proposed tax credits for US-union-made EVs would severely affect Mexico’s economy and auto distribution.

The US bill is currently stalled in the country’s Senate after failing to receive unipartisan support from the president’s democratic party. President Biden has since stated that the next plan of action will likely consist of introducing parts of the plan as separate programs and policies that could individually gather support to be passed. One of Biden’s plans includes gathering support for an over US$500 billion budget for climate change responses.

Mexico continues to fight the US’s proposed fiscal incentives, which grant up to US$13,514 for domestic purchases of EVs manufactured by US unions. Mexican automakers are concerned that if the legislation passes, the bill will put at risk over 1 million jobs in the Mexican automotive industry. Minister Clouthier also mentioned that if the Act were to pass, migration to the US might increase as Mexicans find themselves unemployed.

“The law breaks the equity we looked for with the North American commerce agreement. The question is simple: Do they consider us part of North America or not? We share the same rejection as Canada does. The Mexican community is very important in the US and their rejecting this initiative could be taken into account by Senators while executing their vote,” Clouthier said in an interview with the LA Times.

In 2021, Mexico reached a record participation in automotive exports to the US, representing a 13.9 percent annual increase to US$128 billion. US makes up the largest importer of vehicles in the world and Mexico and Canada are its primary suppliers due to ongoing trade agreements initiated through NAFTA and continued by USMCA. However, tensions have arisen for the three countries following several disputes regarding domestic policies, trade agreements and changing federal administrations.

The USMCA’s dispute regarding auto part origins has caused tensions to arise between all three countries, which are likely to continue despite the outcome to be reached by the deciding panel of experts that will meet in the coming months. Furthermore, Texas Senator Ted Cruz yesterday on the Senate floor accused Mexican President Andrés Manuel López of instigating violence against journalists in the country and called for US President Bident to pressure his counterpart to change course, adding a possible new set of tension between the two countries.

Between immigration and trade agreements, US-Mexico relations face some difficulties that must be overcome, particularly if the two start to blend. “We want the relationship to be fair and equative. You cannot ask for support with topics like immigration while hitting us with the blow of this initiative,” Clouthier said.