MEXICO CITY/TAKOMA PARK, Md. (Reuters) – Mexico will not exclude the possibility of appealing against an international panel about tax incentives for U.S.-made electrical vehicles. President Andres Manuel Lopez Obrador indicated on Tuesday.

Mexico promised to examine a variety of legal actions as a response to the U.S. tax incentives that Mexican officials claim are discriminatory and against free trade.

U.S. Congress considers a $12,500 tax credit, including $4,500 for U.S. made electric vehicles. Under a House proposal, only U.S.-made vehicles will be eligible for the $12,500 credit.

Lopez Obrador reaffirmed his opposition to the incentive when Lopez Obrador was asked. Lopez Obrador claimed the subsidies would put Mexico at risk and go against USMCA guidelines.

He stated that “We are already making steps to ensure that the subsidy isn’t applied and we don’t rule out the possibility for presenting an appeal according to the treaty in order that this complaint may be heard by an International Panel.”

Lopez Obrador stated that there was agreement with Canada without providing further information.

Canada suggested Monday aligning its electric vehicle tax policies with those of the United States, in an effort to end the U.S. tax credit dispute.

Canada indicated that it would be ready to start a USMCA-related dispute settlement procedure over the tax credits. Canada is concerned it might undermine its efforts in Ontario to manufacture electric vehicles and undermine North American integration.

Canada stated Friday that if the EV credit was implemented, it would respond by… applying tariffs to American exports.

Jennifer Granholm, U.S. Energy Secretary, said Tuesday that she had been in touch with Canadian officials regarding the EV credit. I know that the U.S. Senate continues to debate the tax credit. We will see what comes out of the negotiations between the White House, the Senate.