Trudeau arrives in US with last-minute warning to Democrats over electric vehicle tax credit


Prime Minister Justin Trudeau arrived in Washington DC today with a warning over the legislation Democratic lawmakers are about to pass Congress.

There is no immediate sign that he has changed his mind. From the White House to the Senate, politicians who support the policy always seem determined to move forward.

The Prime Minister has landed for a two-day visit as U.S. lawmakers complete a massive budget bill that includes an electric vehicle tax credit that U.S. trading partners bitterly oppose.

Trudeau raised these concerns during a meeting on Capitol Hill today with leaders of the House of Representatives and the Senate, and will do so again on Thursday with President Joe Biden.

He mentioned them during his first public stop in the US capital, during a public forum at the Wilson Center think tank.

Trudeau and House Speaker Nancy Pelosi exchanged kind words when they met on Capitol Hill. However, in remarks to media ahead of the meeting, Trudeau said he also wanted to discuss his concerns about supply chains with her. (Adrian Wyld / The Canadian Press)

The premier argued that the tax credit plan ran counter to decades of continental integration in the auto industry, from the signing of the 1965 Auto Pact to the new North American trade deal.

“We’re a little concerned about warrants or discounts on zero-emission vehicles,” Trudeau said at the event, moderated by former US Ambassador to Canada David Jacobson.

“[That] could have a real negative impact. “

Trudeau’s message to Americans is that credit, as currently conceived, would do more than hurt countries that export automobiles to the United States – it would also damage continental supply chains and penalize American workers. whose products are exported for assembly.

But he is in a race against time.

Democrats hope to pass a version of the bill through the House of Representatives overnight. The bill faces a bumpier race in the Senate, where lawmakers hope to complete its passage this year.

The invoice includes a credit of $ 12,500 for the purchase of electric vehicles. It is designed to direct the production of electric vehicles to Michigan and its unionized factories.

More than a third of this discount only applies to purchases of vehicles assembled in the United States by unionized workers, and in 2027 the full credit will only apply to those vehicles.

Trudeau said it could hurt U.S. companies exporting to non-U.S. Factories, while undermining the competitiveness of the entire North American auto industry.

Prime Minister Justin Trudeau is warning the Biden administration that a proposed new tax credit for electric vehicles threatens continental supply chains. (The Canadian Press)

“Doing this together is good for all of us,” Trudeau said, adding that recent tensions in supply chains around the world made it clear that countries needed reliable allies.

He used the example of essential minerals and the role that Canadian mines could play in reducing the United States’ dependence on China for key components of electric vehicles.

“In a time when supply chains are disrupted around the world, when people are rethinking, ‘Where did we come from? And what if there are outages, be they political, geographic or climate related? How do we ensure resilient supply chains? ”“ Trudeau said. “Well, I come back to the critical minerals example.

“America could do worse than rely on its closest friend, its oldest friend, its most trusted friend.”

Democrats don’t back down

There has been no sign to date that America’s Democrats have given in to their plan.

In fact, even as Trudeau landed in Washington, President Biden was traveling to Detroit to promote his legislative agenda at one of Michigan’s electric vehicle factories that should benefit from it.

Biden said the purpose of the planned incentive is to encourage the purchase of “clean, US-made, union-made vehicles.” He introduced the legislation as part of a larger effort to revitalize American manufacturing in the face of competition with China.

Appearing at the event with Biden were Congressional sponsors of the vehicle credit plan. One of those backers, Michigan Senator Debbie Stabenow, ridiculed foreign automakers for trying to stop the plan, targeting Toyota.

When Trudeau arrived in Washington, President Joe Biden was in Detroit on Wednesday at a GM plant that would benefit from its electric vehicle tax credit. (Jonathan Ernst / Reuters)

“It takes a lot of nerve,” she said, saying Japan is making it difficult to import American cars and pointing out the hypocrisy of Toyota using union labor in Japan but not the United States. .

“Take our jobs home!” “

Canada was not mentioned at the event. However, aboard Air Force One en route to Michigan, a spokesperson for Biden was asked about the objections coming from Canada and Mexico and was turned away.

White House Deputy Press Secretary Chris Meagher said there is a long history of countries using tax credits to influence consumer choices. He said Biden campaigned on a pledge to help unions and restore the middle class.

He also said that, contrary to indications from the White House last week, there will be no joint press conference for the three North American leaders after their summit on Thursday.

The only indication so far that the plan may face resistance comes from the Senate – where Senator Joe Manchin, a Democrat, has criticized it. Manchin is considered a deciding vote.

U.S. Senator Joe Manchin (D-WV) walks through a crowd of Capitol Hill reporters in front of the United States Capitol in Washington, the United States, September 30, 2021. (Leah Millis / Reuters)

But Manchin hasn’t been clear on what he wants instead.

Negotiations between Manchin, the Senate leadership, the White House and the House of Representatives over the next few weeks will determine the fate of this bill – the most important of Biden’s presidency to date.

Deputy Prime Minister Chrystia Freeland was among ministers in Washington with Trudeau. She said they made it clear to U.S. lawmakers how seriously they take this issue.

In fact, Freeland told reporters, this irritant could become a pervasive problem in Canada-U.S. Relations if left unresolved. She said she was convinced the plan violated the New North American Trade Pact, which suggests the possibility of future trade lawsuits.

At the Wilson Center event, Trudeau also reiterated his call for a global carbon price.

He said it was unfair for countries like Canada to price carbon and produce low carbon aluminum while competing with countries that produce such dirtier and cheaper products.

The United States does not have a national carbon price. This electric vehicle credit is, so far, his most aggressive attempt at climate action with a chance of being passed by Congress.

In this regard, Trudeau arrived in Washington with the support of a recurring political rival: the premier of Ontario, Doug Ford.

Ford said the auto sectors in both countries are hip-linked. He said he expressed this solidarity with Trudeau during a call from the prime ministers on Tuesday night.

“I said to the Prime Minister last night, and all the premiers are of the same opinion, ‘We will stand side by side as Team Canada when they go to the United States,” Ford said at the meeting. ‘a press conference. “We all told him – I told him personally, ‘We will support you. We will do whatever you need to do to make sure we are left out.’ Because it’s absolutely ridiculous. “

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