U.S. trade chief Tai, EU’s Dombrovskis to keep talking on EV tax credits

Jaguar I-Pace electric vehicles are tested at Waymo's operations center in San Francisco

WASHINGTON (Reuters) – U.S. Trade Representative Katherine Tai met with her European Union counterpart in Germany on Wednesday, and the two agreed to continue discussions about U.S. electric vehicle tax credits that have drawn the ire of EU officials.

Tai met with European Commission Vice President Valdis Dombrovskis on the sidelines of a Group of Seven (G7) trade ministers meeting to discuss various issues, including ongoing U.S.-EU negotiations on steel and aluminum, USTR said.

“Both ministers agreed to continue discussions on the electric vehicle tax credits in the Inflation Reduction Act,” USTR said, referring to the $430 billion climate, health and tax bill signed into law by President Joe Biden last month.

The EU and South Korea last month raised concerns about tax credits for purchases of electric vehicles included in the legislation, which they said may discriminate against foreign-made vehicles and breach World Trade Organization rules.

The bill restructures the existing $7,500 new-EV tax credit and creates a $4,000 rebate for used EVs. It also includes tens of billions of dollars in new loan, tax credit and grant programs for automakers to build cleaner vehicles.

The Alliance for Automotive Innovation, a trade group that represents VW, General Motors Co, Toyota Motor Corp and Ford Motor Co among others, last month said the law would make 70% of 72 U.S. electric, plug-in hybrid and fuel-cell EVs that currently qualify for tax credits ineligible upon Biden’s signing the law.

(Reporting by Andrea Shalal; Editing by Leslie Adler and Stephen Coates)