Canada has proposed aligning electric vehicle tax policy with U.S. to settle dispute -PM

OTTAWA (Reuters) -Canada has proposed aligning its electric vehicle tax policy with that of the United States to settle a dispute over proposed U.S. credits for American-made vehicles, Prime Minister Justin Trudeau told reporters on Monday.

Canada dramatically hardened its tone with Washington on Friday, threatening to slap tariffs on a range of American goods unless the matter was resolved. Ottawa says the credits would badly damage its auto industry.

Trudeau said his government was working hard to ensure the United States understood the credit was bad for both nations, given the integrated nature of the continental auto industry.

"There are a number of solutions we've put forward. One of them would be to align our incentives in Canada and in the United States to make sure that there was no slippage or no unfair advantages on one side or the other," Trudeau said.

"We are happy to do that. Those are conversations that are ongoing right now," he continued.

Months of lobbying have done little to dissuade U.S. legislators, who are considering a new $12,500 tax credit that would include $4,500 for union-made U.S. electric vehicles.

Canada says this is equivalent to a 34% tariff on Canadian-assembled electric vehicles.

(Reporting by David Ljunggren in OttawaEditing by Matthew Lewis)