Democrats Advance Plan to Subsidize Electric Cars Made in Mexico, Canada

Senate Democrats’ filibuster-proof reconciliation package, dubbed the “Inflation Reduction Act,” is set to help subsidize electric vehicles manufactured in Mexico and Canada.

On Sunday, Senate Democrats passed the Inflation Reduction Act on a party-line vote, with Vice President Kamala Harris splitting the 50-50 tie.

Part of the legislation, estimated to eliminate about 30,000 jobs in the United States, serves as a major win for Mexico’s and Canada’s auto industries as well as the multinational corporations that outsource American auto jobs to each of those countries.

That victory for Mexico’s and Canada’s auto industries is slipped into electric vehicle tax credits for consumers. Rather than including “Buy American” rules that require electric vehicles to be fully produced in the United States to be eligible for the tax credits, the legislation allows the credits to be used on electric vehicles made in Mexico and Canada.

Some Senate Democrats and United States auto companies wanted to loosen those production rules even more — allowing electric vehicles with batteries produced and sourced in China to be eligible for the tax credits. That provision was ultimately left out of the final deal.

The final provision is a win specifically for United States auto companies looking to cut labor costs as they have increasingly outsourced American auto jobs to Mexico thanks to the North American Free Trade Agreement (NAFTA).

After the U.S. entered NAFTA with Mexico and Canada, “Mexico’s light vehicle production more than tripled — from 1.1 million units in 1994 to nearly 3.5 million units in 2016,” as researchers at the Chicago Fed have noted.

Thanks to Mexico’s vastly lower wages, U.S. auto companies have enjoyed paying workers less and cutting benefits down when they outsource American auto jobs. From 2007 to 2014, on average, Mexico’s wages in auto assembly were about one-fifth of those in the United States, and wages in vehicle parts production were about one-eighth of those in the United States.

The Center for Automotive Research has also noted that labor costs for assembly in Mexico are about $600 cheaper than in the U.S. and vehicle parts production is about $1,500 cheaper in Mexico than in the U.S.

Most notoriously, General Motors (GM) closed a number of U.S. auto plants over the last few years and has sent jobs — specifically in electric vehicle production — to Mexico.

John Binder is a reporter for Breitbart News. Email him at jbinder@breitbart.com. Follow him on Twitter here.