- The Energy Mix - https://www.theenergymix.com -

Trudeau Tackles Biden’s EV Tax Credit on Visit to Washington

U.S. President Joe Biden was non-committal yesterday as Prime Minister Justin Trudeau said he directly raised concerns about a proposed electric vehicle tax credit and associated Buy American rhetoric in a US$1.75-trillion climate and infrastructure now charting a tortuous path through the U.S. Congress.

Trudeau made the remarks Thursday night following a trilateral summit with the American leader and Mexican President Andrés Manuel López Obrador—the first so-called Three Amigos summit since 2016, The Canadian Press reports.

“This summit has been extremely effective,” the prime minister told a news conference. “Our partnerships are strong and unwavering.”

Biden offered no hints earlier Thursday he was willing to budge on a controversial $12,500 tax credit for American-made electric vehicles, a part of the wider infrastructure package that the Canadian industry has described as a potential body blow.

Trudeau said he stressed Canada’s concerns about the tax credit throughout two days of meetings with the Biden administration in Washington, DC, highlighting the impact it would have on Canadian jobs and its auto industry. “We’re going to continue to do the work necessary to not just highlight our position but find a solution,” he said.

Asked whether he was disappointed that no solution was reached, Trudeau said there are going to be challenges in any relationship as deep as that of Canada and the U.S., and he will continue to engage with the administration in constructive ways.

He said the Americans are “very aware” of Canada’s concerns and the threats the proposed tax credit poses to decades of integrated automaking enshrined in the United States-Mexico-Canada Agreement (USMCA), the free trade deal that replaced NAFTA.

“What’s troubling to Canada—and other countries—is that to get $5,000 of the credit, starting in 2027, the EV and its battery must have been built in the U.S.,” iPolitics explains. “About 90% of Canadian-made cars are produced in Ontario.”

The two leaders also discussed the deeply controversial Line 5 pipeline project, which CP describes as “another irritant between the two nations” for which the Biden administration “has shown little enthusiasm”. And they announced that they will revive a North American working group on violence against Indigenous women and girls. an initiative Trudeau announced with then-U.S. president Barack Obama in Ottawa in 2016 before it was shelved during the Trump years.

Earlier Thursday, CP writes, Biden offered “the usual bilateral pleasantries” as he welcomed Trudeau to the Oval Office, but the U.S. president appeared in no mood for compromises on the EV tax credit. “We’re going to talk about that to some extent,” Biden said. “We haven’t even passed it yet in the House—there’s a lot of complicating factors.”

Some U.S. media have speculated the infrastructure bill won’t pass the U.S. Congress until later in December, but CBC says that puts the PM in a “race against time” to mute the impact of Biden’s EV tax credit.

“Trudeau’s message to Americans is that the credit, as it’s currently designed, would do more than hurt the countries that export autos to the U.S.—that it would also damage continental supply chains and penalize U.S. workers whose products are exported for assembly,” the national broadcaster writes. But “Democrats hope to pass a version of the bill through the House of Representatives any day now. The bill faces a bumpier ride in the Senate, where lawmakers hope to complete its adoption this year.”

White House press secretary Jen Psaki said the Biden administration doesn’t believe the tax credit violates the USMCA. “We don’t view it that way, I think it’s safe to say,” she told media. “I would say that, in our view, the electric vehicle tax credit is an opportunity to help consumers in this country.”

Biden, who has made it clear he shares some of his predecessor’s protectionist instincts, also designed the credit to favour vehicles made with U.S. union labour, CP writes.

Trudeau—accompanied by a roster of Cabinet ministers that included Deputy Prime Minister Chrystia Freeland, Foreign Affairs Minister Melanie Joly, Trade Minister Mary Ng, and Public Safety Minister Marco Mendicino—used his first day in Washington on Wednesday to talk up Canada’s competitive advantage on critical minerals used in batteries for computers, cell phones, electric vehicles, and other devices.

Their meetings on Capitol Hill included time with House Speaker Nancy Pelosi (D-CA) and several U.S. senators, including Senate minority leader Mitch McConnell (R-KY).

But while the Canadian leaders were in DC, Biden was visiting a Detroit-area auto plant, where the Washington Post described him as the “car-aficionado-in-chief” as he “took a spin through a General Motors plant retooled to manufacture electric cars”.

“We’re going to make sure the jobs of the future end up here in Michigan, not halfway around the world,” Biden told a group of EV assembly workers. “That means that here in Detroit, you’re going to set a new pace for electric vehicles. This is not hyperbole. It’s a fact.”

The news coverage from both CBC and the Post had most of the Biden administration’s protectionist sentiment aimed at China, with Sen. Debbie Stabenow (D-MI) ridiculing overseas automakers for trying to derail the EV plan.

“It takes a lot of nerve,” telling reporters that Japan makes it harder to import U.S. cars, while Toyota hires union labour in Japan but not in the U.S. “Bring our jobs home!”

While Canada wasn’t mentioned during the Detroit visit, a White House deputy press secretary said he saw no grounds for Canada or Mexico to complain about the tax credit.

“Chris Meagher said there’s a long history of countries using tax credits to influence consumer choices,” CBC writes. “He said Biden campaigned on a promise to help unions and restore the middle class.”

The Canadian leaders had a rather different take.

“At a time when supply chains are disrupted around the world, when people are rethinking, ‘Where are we getting things from? And what happens if there are breakdowns, either political or geographic or climate-related? How do we ensure resilient supply chains?'” Trudeau said. “Well, I go back to the critical minerals example. The U.S. could do worse than rely on its closest friend, its oldest friend, its most reliable friend.”

“Job 1 for us is just raising awareness,” Freeland added Wednesday. “I think job 2—and this is a very Canadian approach—is, we don’t want to just show up and say, ‘Here’s a problem.’ We’d like to show up and say, ‘Here’s the problem, and here are some ways that we can solve the problem.'”