Aurelia Butler

WASHINGTON (Reuters) -General Motors said Friday it wants the U.S. Treasury to reconsider classification of GM’s electric Cadillac Lyriq to allow it to qualify for federal tax credits.The Treasury and Internal Revenue Service did not classify the Lyriq as an SUV, meaning its retail price cannot be above $55,000 to qualify for up to $7,500 in federal tax credits. The Lyriq currently starts at $62,990. SUVs can be priced at up to $80,000 to qualify, while cars, sedans and wagons can only be priced at up to $55,000. “We are addressing these concerns with Treasury and hope that forthcoming guidance on vehicle classifications will provide the needed clarity to consumers and dealers, as well as regulators and manufacturers,” GM told Reuters Friday.GM said Treasury should use criteria and processes similar to the Environmental Protection Agency and Energy Department. “This drives consistency across existing federal policy and clarity for consumers.”GM delivered just 122 U.S. Lyriq vehicles in 2022. A Treasury spokesperson defended the classifications, saying the agency used fuel economy standards “which are pre-existing — and longstanding — EPA regulations that manufacturers are very familiar with. These standards offer clear criteria for delineating between cars and SUVs.”Legislation approved by Congress in August reformed the EV tax credit and lifted the 200,00-vehicle per manufacturer cap that had made Tesla (NASDAQ:TSLA) and GM ineligible for EV tax credits effective Jan. 1.Tesla Chief Executive Elon Musk tweeted this week the EV tax rules were “messed up.” The five-seat version of the Tesla Model Y is not considered an SUV, while the Model Y seven-seat version is and can qualify for the credit.The Volkswagen (ETR:VOWG_p) ID.4 is not classified as an SUV, while the all-wheel drive version is, the IRS said. VW declined comment Friday.Last month, Treasury said it would delay until March releasing proposed guidance on required sourcing of EV batteries. This means some EVs that do not meet the new requirements have a brief window of eligibility for the full $7,500 tax credit before battery rules take effect. More

MEXICO CITY (Reuters) -U.S. President Joe Biden and his Mexican counterpart aim to make progress on strengthening economic integration, combating drug cartels and managing immigration on Monday, even as friction over Mexico’s energy policies weighs on joint cooperation.Led by President Andres Manuel Lopez Obrador and Foreign Minister Marcelo Ebrard, Mexican officials set out the U.S.-Mexico bilateral agenda after Biden’s arrival in Mexico City on Sunday evening for a North American leaders’ summit.Lopez Obrador accompanied Biden from the airport to his hotel, and said the two broached issues they would discuss on Monday, including regional economic cooperation and migration.”Integration needs to be strengthened,” Lopez Obrador told a news conference, saying he expected to reach “good agreements” with Biden.Lopez Obrador is hosting Biden and Canadian Prime Minister Justin Trudeau between Monday and Wednesday for the first summit between the three since late 2021. Trudeau is arriving on Monday afternoon, with trilateral leaders’ talks due on Tuesday.U.S. National Security Adviser Jake Sullivan said Biden believed he would emerge from the summit with “commitments for stronger cooperation” to tackle fentanyl, a synthetic opioid blamed for thousands of U.S. deaths.The plan is in essence for Mexico to try to reduce the amount of fentanyl smuggled across the border in exchange for the United States attempting to bring down the number of guns being trafficked into Mexico, two Mexican officials said, speaking on condition of anonymity. Mexico last week arrested a prominent cartel leader, Ovidio Guzman, who is wanted in the United States. Weaponry used by Guzman’s gang had come into the country from U.S. border states, one of the Mexican officials said.The countries’ leaders are expected to talk about deepening economic ties, even as disagreements persist over Lopez Obrador’s nationalist energy policies which led to Washington and Ottawa launching a formal trade complaint in July.Sullivan told reporters subsequent consultations had identified “potential pathways forward” on the impasse.”But we’re not there yet,” he said. “And we’ll make determinations about next steps based how things unfold here.”Since the COVID-19 pandemic battered supply chains, policymakers have stepped up calls for firms to relocate business from Asia to beef up the economy covered by the United States-Mexico-Canada (USMCA) regional trade agreement.DOMESTIC POLITICSLopez Obrador has also alarmed the United States with a plan to prohibit imports of genetically-modified corn. Mexico agreed to delay the ban until 2025, but the issue is likely to surface. The three trading partners have also been at loggerheads over auto rules of origin.”Trade tensions over automobiles, customs rules, genetically-modified corn and Mexico’s energy policies are already high and could sharpen,” said Jake Colvin, President of the Washington-based National Foreign Trade Council.”To create a North American corridor to outcompete China, the United States, Canada and Mexico need to be on the same economic page,” he added.Lopez Obrador, a combative leftist, says his energy policy is a matter of national sovereignty, arguing that past governments skewed the market to favor private interests.The United States and Canada say their firms have been disadvantaged by Lopez Obrador’s campaign to give control of the market to his cash-strapped state energy companies, and the row has taken the shine off the outlook for investment.Trudeau told Reuters on Friday he would make the case that resolving the energy dispute would help bring more foreign capital to Mexico, and was confident of making progress.As part of that drive, Lopez Obrador, who in June snubbed Biden’s invitation to the Summit of the Americas in Los Angeles in protest at his exclusion of the leaders of Cuba, Venezuela and Nicaragua, wants to discuss his plan to boost solar power in northern Mexico and secure U.S. financial support for it.Mexico has also urged the United States to commit funds to Central America and southern Mexico to boost development and stem migration from what has long been a poor region, and to make it easier for migrants to get U.S. jobs.Christopher Landau, U.S. ambassador to Mexico under former President Donald Trump, said domestic politics meant finding compromises on energy and migration would be difficult.”There’s no obvious deal that satisfies all of their domestic interests,” he said, “but I think it’s in all their domestic interest to say they get along.” More

Mary Daly became the latest Federal Reserve official to raise the prospect of the US central bank slowing the pace of its interest rate increases to a quarter-point rise next month, even as policymakers backed the benchmark rate surpassing 5 per cent.Daly, president of the San Francisco Fed, on Monday said that while it is “really too soon to declare victory” on inflation, the central bank is considering raising the federal funds rate 0.25 percentage points when officials next gather later this month.That would mark a step down from the half-point increase the Fed implemented in December and a reversion to a more typical pace of monetary tightening for the central bank. The Fed delivered a historic string of 0.75 percentage point rate rises as it raced to tame price pressures after underestimating the inflation problem last year.When asked in an interview with the Wall Street Journal on Monday whether she supported a quarter-point or half-point rate rise for the next rate decision, Daly said the “case can be made for either one”.“It really is about incoming information,” she said, adding the Fed is “completely data-dependent” as it assesses how much further to tighten monetary policy. Daly said she still thinks the fed funds rate will need to surpass 5 per cent in order to get inflation down but how far above that level is “not completely clear”.Daly’s comments echo those of other regional presidents, including James Bullard of the St Louis Fed and Atlanta’s Raphael Bostic. Both have said the Fed still has more work to do to damp demand and that the data would determine whether the central bank could move at a more measured pace as it approaches its so-called terminal rate.Thomas Barkin, president of the Richmond Fed, said last week that it “makes sense to steer more deliberately as we work to bring inflation down”, suggesting support for a smaller rate rise.According to individual projections published in December, most officials back fed funds peaking at between 5 per cent and 5.25 per cent. It currently hovers between 4.25 per cent and 4.50 per cent. Minutes from the final gathering of 2022, released last week, also showed that no policymaker backed rate cuts until 2024, a message officials recently reiterated.

Traders in federal funds futures markets expect the Fed to opt for a quarter-point rate rise in February and stop short of raising the policy rate above 5 per cent. They also bet the Fed will reverse course and cut rates by the end of year.Speculation about a less aggressive Fed has become more pronounced as the economic data have improved, showing less intense inflationary pressures and a slowing labour market. December’s consumer price index report will be released on Thursday.Daly said she is paying closest attention to services inflation, which she said is the best proxy for underlying price pressures, once food, energy and housing costs are stripped out.Those costs, which are directly tied to the labour market, have shown “no sense” of slowing, she said. More