Canada Pushing Against EV Subsidies Limited to US-Assembled Vehicles
Plans to increase a tax credit for electric vehicles containing a U.S.-made battery if the car was assembled in a U.S., union-represented plant is a source of worry for Canada, Prime Minister Justin Trudeau said in French Nov. 18 at a news conference after the North American Leaders' Summit, according to a story from the Canadian Broadcasting Corporation. "This would be quite a problem for vehicle production in Canada," he said. "We stressed this with the Americans throughout our conversations. They've heard us loud and clear." The provisions are part of the Build Back Better bill that passed the House the following day on Nov. 19.
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The CBC said President Joe Biden avoided taking a stand on whether the subsidy language could be changed. "We're going to talk about that. It hasn't even passed yet through the House … and we don't know what will happen in the Senate. There's a lot of complicating factors," he said prior to the bill's House passage.
It is the domestic-only requirement after 2027 that's most alarming to USMCA partners. The issue was brought up during the Nov. 18 trilateral meeting of Biden, Trudeau and Mexico's President Andres Manuel Lopez-Obrador. Currently, Ford has an electric vehicle plant in Mexico and GM is planning one in Mexico and one in Canada, in addition to the two it already has in the U.S.
Autos Drive America CEO Jennifer Safavian issued a statement after the summit that said, "With growing concerns from our trading partners over the discriminatory electric vehicle tax credit in the Build Back Better Act, President Biden needs to oppose policies that strain relationships with our allies. The United States should enact policies that will benefit the climate, provide a level playing field that leads to expanded competition and consumer choice with electric vehicles, and be consistent with the recently enacted United States-Mexico-Canada Agreement." Autos Drive America represents automakers with U.S. production outside Detroit's Big Three. Both Mexico and Canada say a domestic-only subsidy breaks USMCA rules.
After passage of the BBB bill, Safavian issued another statement: "We are disappointed that the House passed Build Back Better Act includes a discriminatory electric vehicle tax incentive that provides a $4,500 UAW bonus that harms American autoworkers who have chosen not to unionize. ... With the growing number of stakeholders raising concerns about this legislation, 25 Ambassadors to the United States and 11 U.S. Governors, we are not the only ones who think this is bad policy."