Japan warns US of possible jobs hit by electric vehicle tax credit rules


Japan has warned the United States that new tax credits for electric vehicles introduced by Washington could discourage Japanese investment and hurt jobs in the world’s largest economy.

Tokyo, in a comment submitted to the US Treasury Department on Saturday raised a number of concerns about the Inflation Reduction Act (IRA) tax credits, which are designed to build more resilient supply chains as the United States aims to reduce their exposure to China.

The statement is the culmination of long-standing concerns shared by the Japanese government and the country’s auto lobby group that the IRA is putting Japanese automakers at a disadvantage in their crucial North American market.

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The requirements to be eligible for the tax credit are “not consistent” with the shared policy between the Japanese and US governments to build resilient supply chains by working with allies and partners, the government said.

“It could be that Japanese automakers are hesitant to invest more in vehicle electrification, the government said. “This could have negative effects on the expansion of investment and employment in the United States.”

Japan joins South Korea and European countries that have previously raised concerns about the legislation. South Korea’s foreign ministry said on Friday it was seeking a three-year grace period on the law to allow its automakers to continue to receive incentives for electric vehicles in the United States.

Under the law, rules governing the current $7,500 electric vehicle tax credit aimed at persuading consumers to buy the vehicles will be replaced with incentives designed to bring in more battery and electric vehicle manufacturing. in the USA.

National content requirements will increase over the next six years.

New restrictions on battery supply and critical minerals, as well as price caps and revenue caps, will take effect Jan. 1, potentially making all current electric vehicles ineligible for the full $7,500 credit. .

The US Treasury Department and the Internal Revenue Service began seeking public comment on the new law last month.

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The Japanese government has said limitations on the range of vehicles eligible for the electric vehicle tax credit would reduce the options available to U.S. consumers at affordable costs and could interfere with efforts to meet the government’s climate goals. Biden administration.

Industry Minister Yasutoshi Nishimura raised concerns about the law with US Commerce Secretary Gina Raimondo at a meeting in Los Angeles in September.

The Nikkei newspaper reported that Nishimura told his US counterpart at the meeting that the legislation could violate international law.

Japan Automobile Manufacturers Associationa major Japanese car lobby, said in August it was concerned about the law and would closely monitor developments.

Even some US automakers have expressed apprehensions about certain aspects of the law.

Ford Motor Co said Thursday that the U.S. Treasury Department should narrow the definition of a “foreign entity of concern” to ensure more electric vehicles qualify for a consumption tax credit of up to $7,500.

  • Reuters with additional editing by Sean O’Meara

Read more:

Seoul seeks exemption for EV makers to get US tax credits

Japan complains to US about electric vehicle tax credit law – Nikkei

Sean O’Meara

Sean O’Meara is an editor at Asia Financial. He has been a newspaper man for over 30 years, working for local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. Passionate about football, cricket and rugby, he is particularly interested in the financing of sport.

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