Prime Minister Justin Trudeau’s top trade official claimed a diplomatic victory for Canada on US electric vehicle tax credits proposed in a deal between senators Chuck Schumer and Joe Manchin.
In a statement on Thursday, Trade Minister Mary Ng said her government’s advocacy played a role in preventing these credits from being restricted to vehicles built by unionized US workers.
The Senate deal announced on Wednesday revives much of President Joe Biden’s tax and climate agenda, but the legislation changes the language on the tax credits so they apply to vehicles built in the North American auto industry, not just in the U.S.
“It took Team Canada advocacy for us to get here,” Ng said in an emailed statement. “Since the Prime Minister’s first meeting with President Biden last year, we have been relentless in underscoring that the original proposal would be harmful to both Canada and the US, so we’re glad to see that recognized in the new version of the bill.”
Canadian officials had made a major diplomatic effort over the winter to argue the original version would roll back decades of integration in the North American auto sector. Mexico’s government also slammed the initial proposal, calling it self-defeating for the US.
The original version of the tax credits, which were in Biden’s Build Back Better bill, was also opposed by companies such as Tesla and Toyota, who argued it gave an unfair advantage to the Detroit-based automakers and their unionized factories.
The new legislation, which could still change as it moves through Congress, will allow carmakers to continue offering $7,500 in tax credits for the purchase of new “clean cars” with some conditions: they will need to be built with minerals that are extracted or processed in a country the US has a free trade agreement with, and have a battery that includes a large percentage of components that were manufactured or assembled in North America.
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