Prime Minister Justin Trudeau said Thursday that he was pressing his U.S. counterpart to drop a provision of the $ 1.9 trillion pending social infrastructure bill that has the potential to destroy the Canadian auto sector.
“We care,” Trudeau said in French at a press conference after the North American Leaders Summit. “This would be quite a problem for vehicle production in Canada. We emphasized this with the Americans during our conversations. They heard us loud and clear.”
At issue is a clause buried in the Rebuild Better Law, President Joe Biden’s plan to inject hundreds of billions of dollars into social programs and climate initiatives to help suck the country’s COVID-19 recovery.
To stimulate the fledgling electric vehicle (EV) industry, the Democratic-controlled Congress is offering large tax rebates worth up to $ 12,500 to buyers of new electric cars – provided those cars are manufactured by union workers in the United States.
Experts agree that the tax measure would be a major blow to the Canadian auto sector, which is trying to attract new investment as the industry moves away from internal combustion engines. The fear is that manufacturers would transfer production from Canada to the United States to produce cars that qualify for the generous subsidy.
The program would privilege cars made in so-called “blue” states where unionized factories rule, to the detriment of Ontario factories like GM’s Oshawa assembly, Ford’s factory in Oakville or the expanding Chrysler operation in Windsor. It will also hit U.S. auto factories in “entitled to work” states where the United Auto Workers (UAW) union is a non-factor.
Trudeau promised to continue the conversation with Biden and U.S. lawmakers and emphasize that U.S. EV production depends on critical minerals that Canada has in abundance, such as cobalt, nickel and lithium.
Biden was uninvolved when asked if his administration would exempt Canada from such a tax plan, because the North American auto industry is so deeply intertwined.
“We’ll talk about it. It hasn’t even crossed the House … and we don’t know what’s going to happen in the Senate. There are a lot of complicated factors,” he said. The bill was expected to pass, with the tax credit intact, late Thursday.
Michigan Republican Rep. Bill Huizenga – who says he stands with Canada on the EV tax rebate – met with Trudeau on Wednesday as part of a bipartisan group of lawmakers that included U.S. House Speaker Nancy Pelosi.
He said some are “surprised” by Trudeau’s “strong” reaction to the issue.
“This really was the issue that dominated the conversation and the prime minister really emphasized the issue,” Huizenga told CBC. Power & Politics.
“I think it caught them a little flat-footed, to be honest.”
GARDU | Canada rejects “Buy American”:
David MacNaughton, Canada’s former ambassador to the United States, says Biden and congressional leaders may not understand how harmful this action could be to the Canadian economy. After oil products, cars are easily the country’s second largest export.
During a stop at a new GM factory in Detroit yesterday, Biden said he wants cars made in the U.S. “not halfway around the world.”
“But what he’s really doing is stealing jobs from across the river,” MacNaughton said, referring to Windsor. “Part of the thing I realized when I was in Washington is that Americans don’t think about the relationship between our economy and their economy, and the importance of Canada to so many states in the United States – we have to constantly remind them . “
GARDU | Canada says EV incentive violates trade agreement:
While the threat of EV tax rebate is concerned, MacNaughton said he is sure there will be some sort of solution.
MacNaughton said the face-off between Trudeau and Biden could help Canada advance its agenda. “There is no substitute for meeting in person to be very honest about these issues,” he said.
Flavio Volpe, the president of the Automobile Parts Manufacturers Association, says the EV tax rebate will cost both Canadian and U.S. jobs.
Volpe said the program, as currently structured, would allow automakers to provide more foreign auto parts from Asia for their U.S.-assembled cars and then pass them off as “U.S.-made.”
Volpe said there are seven times more jobs – more than 700,000 people – working in the parts business compared to auto assembly.
As the bill moves to the Senate for further study and debate, Volpe said Canadians should target West Virginia Democratic Sen. Joe Manchin to help rid the bill of the EV provision. Toyota has an engine and transmission plant in its state – a plant that delivers the company’s merger operations in southwestern Ontario. A threat to one is a threat to the other, he said.
In an equally divided Senate where Democrats and Republicans each hold half of the seats, a “no” vote by Manchin would be groundbreaking.