US President Joe Biden deserved credit for being honest when he said at the start of a one-on-one with Justin Trudeau in Washington on Thursday that he was unsure if he could grant the former’s request. Canadian Minister concerning the tax credit for the purchase of electric cars manufactured in the United States that the House of Representatives was then preparing to vote on.
The version of the Rebuilding Better Bill (Build Back Better) that the Lower House of the US Congress passed on Friday effectively contains the US $ 12,500 tax credit so decried by the Canadian delegation that arrived in the US capital this week. Canada’s Deputy Prime Minister Chrystia Freeland warned about the move on Wednesday, insisting that such credit would go against CUSMA, the new free-trade agreement. exchange between Canada, the United States and Mexico, which came into effect last year.
Ottawa is concerned that the adoption of the credit will undermine its efforts to attract electric vehicle manufacturing plants to Canadian soil, when, at present, the auto industry here mainly produces cars and vehicles. some of the most polluting traditional vans. Mme Freeland certainly exaggerated by claiming that a US tax credit that would favor electric vehicles coming out of unionized factories south of the border would risk becoming the biggest irritant in the Canada-US trade relationship. But politically, it is important for Mr. Trudeau’s Liberals to show that they are doing everything in their power to promote the electric shift within Canadian industry and to preserve its some 120,000 jobs, located mainly in Ontario.
Even the Conservative premier of this province, Doug Ford, has embraced this cause. This is quite a turnaround for Mr. Ford, who shows his evolution towards the political center in view of the Ontario election next June. In 2018, Mr. Ford campaigned against subsidies for the purchase of electric cars introduced by the Ontario Liberal government of the day. And his government abolished those same subsidies altogether after taking power. Ford’s Conservatives claimed that promoting imported electric cars would doom the Ontario auto industry, which focuses on the assembly and manufacture of parts for internal combustion vehicles, to certain death. And they didn’t see why Ontario taxpayers should subsidize wealthy people for whom the purchase of a Tesla had become a symbol of prestige that allowed them to brag about their commitment to the environment.
However, Mr. Ford indicated this week that his government is currently considering the idea of reinstating incentives for the purchase of electric cars similar to those already offered by Ottawa and Quebec. The move is in line with his government’s goal of making Ontario a major player in the manufacture of electric cars in North America, while several American states already have a significant lead in this regard. Mr. Ford would like 400,000 of the approximately two million vehicles assembled in Ontario in 2030 to be electric models. Ford, GM and Stellantis (Chrysler) have already pledged to retool some of their Ontario factories to manufacture electric cars from 2025, thanks to significant grants offered by Ottawa and Queen’s Park. The introduction of a tax credit of the kind adopted on Friday by the US House of Representatives could
it will encourage these manufacturers to renounce these commitments? In any case, that is what the members of the Canadian delegation in Washington suggested this week.
However, this tax credit is far from unanimous among the American political class, and it is unlikely that the measure will be adopted in its current form by the Senate. Democratic Senator from Virginia-
Western Joe Manchin, whose support is essential, has already spoken out against the measure. Manchin State has a non-union Toyota plant whose electric vehicles would not qualify for the tax credit in question.
According to Wall Street Journal, this measure would be the product of negotiations between the democratic representatives of Michigan, the United Auto Workers (UAW) and GM, and its provisions would especially favor the electric cars manufactured by this manufacturer in this border state. Currently, the only electric vehicle model that meets all the criteria necessary for the granting of the full amount of the tax credit would be the Chevrolet Bolt. Several other models manufactured in unionized factories, but with imported batteries, would at the very least qualify for a tax credit of US $ 12,000.
With less than a year to go before the midterm elections, and with their majority in the House of Representatives hanging by a thread, Democrats Nancy Pelosi seek to reassure working-class voters in the states of the United States. “Rust Belt”, lost to Donald Trump in 2016, and want to convince them that they have their interests at heart. However, Tesla’s big boss, Elon Musk, rose up against the credit, calling Mr. Biden a “puppet of the UAW.” And that Japanese and Korean manufacturers, whose American factories are non-union and generally located in the southern Republican states, are also lobbying senators to change the eligibility criteria for this tax credit. It is not impossible that this measure will simply be excluded from the final bill. This is why Mr. Biden was telling the truth by claiming that he did not know if he could grant the wishes of his Canadian counterpart. After all, this choice is not entirely up to him.