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Trudeau arrives in U.S. with last-minute warning for Democrats about electric vehicle tax credit

PM says bill close to passing U.S. House of Representatives could have 'a real negative impact'

Prime Minister Justin Trudeau departs on a government plane Wednesday, November 17, 2021 in Ottawa. Trudeau flew to Washington for meetings at the White House.

Prime Minister Justin Trudeau departs on a government plane Wednesday, November 17, 2021 in Ottawa. Trudeau flew to Washington for meetings at the White House.

Photo: La Presse canadienne / Adrian Wyld

RCI

Prime Minister Justin Trudeau arrived in Washington D.C. today with a warning about legislation Democratic lawmakers are on the cusp of advancing through Congress.

The prime minister is in town for a two-day visit as American legislators complete a massive budget bill that includes an electric vehicle tax credit bitterly opposed by the United States' trading partners.

Trudeau planned to raise those concerns during a Capitol Hill meeting today with the leaders of the House of Representatives and the Senate, and again on Thursday with President Joe Biden.

He mentioned them today in his first public stop in the U.S. capital, at a public forum at the Wilson Center think-tank.

The prime minister argued that the tax credit plan flies in the face of decades of continental integration of the auto sector, from the signing of the 1965 Auto Pact to the new North American trade deal.

We are a little bit concerned about the zero-emission vehicle mandates, or rebates, Trudeau said at the event, moderated by former U.S. ambassador to Canada David Jacobson.

[That] could have a real negative impact.

Justin Trudeau and Joe Biden at G7 Summit .Enlarge image (new window)

U.S. President Joe Biden (left) says he is determined to stop China from becoming the world's top dog as long as it remains a dictatorship. But Prime Minister Justin Trudeau said at the G7 Summit that he doesn't share that goal.

Photo: Reuters / KEVIN LAMARQUE

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 damage continental supply chains and penalize U.S. workers whose products are exported for assembly.

But he's in a race against time.

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.

The bill includes new spending on family programs, health care and climate change, and a credit worth $12,500 toward the purchase of electric vehicles.

That last measure is designed to steer electric vehicle production to Michigan and to its unionized plants. More than a third of that rebate is applicable only to purchases of vehicles assembled in the U.S. by union workers, and in 2027 the entire credit will apply only to those vehicles.

Trudeau said this could hurt American companies exporting to non-U.S. plants, while undermining the competitiveness of the entire North American auto sector.

Worker at a car's supply chain.

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

Photo: Reuters / John Gress

Doing this together is good for all of us, Trudeau said, adding that recent strains on supply chains around the world made it clear that countries need reliable allies.

He used the example of critical minerals and the role Canadian mines could play in lessening the United States' dependence on China for key components for electric vehicles.

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.

Democrats not backing down

There's been no sign to date of U.S. Democrats relenting on their plan.

In fact, even as Trudeau was landing in Washington, President Biden was off to Detroit to promote his legislative agenda at one of the Michigan electric vehicle plants that stands to benefit.

The only indication so far that the plan could face resistance is coming from the Senate — where Sen. Joe Manchin, a Democrat, has criticized it. (new window) Manchin is considered a critical swing vote.

Joe Manchin, a Democrat from West Virginia shown on Sept. 30, is trailed constantly by congressional reporters, who record his every utterance about how he might vote on key legislation.

U.S. Senator Joe Manchin (D-WV) makes his way through a crowd of Capitol Hill reporters outside the U.S. Capitol in Washington.

Photo: (Andrew Harnik/AP)

But Manchin hasn't been clear about what he wants instead.

Negotiations between Manchin, Senate leadership, the White House and the House of Representatives over the coming weeks will determine the fate of this bill — the most important of Biden's presidency to date.

At the Wilson Center event, Trudeau also repeated his call for a global carbon price (new window).

He said it's unfair that countries like Canada price carbon and produce low-carbon-footprint aluminum while competing against countries that produce such products dirtier and more cheaply.

The U.S. doesn't have a national carbon price. That electric vehicle credit is, so far, its most aggressive attempt at climate action with a chance of being enacted by Congress.

On that issue, Trudeau arrived in Washington with the support of an on-again, off-again political rival: Ontario Premier Doug Ford.

Ford said the two countries' auto sectors are joined at the hip. He said he expressed that solidarity to Trudeau during a first ministers' call Tuesday night.

I told the prime minister last night, and all the premiers feel the same way, 'We will stand shoulder to shoulder as Team Canada when he goes down to the U.S., Ford told a news conference.

We all told him — I told him personally — 'We'll have your back. We'll do whatever you need to have done to make sure that we be excluded from this.' Because it's absolutely ridiculous.

Alexander Panetta (new window) · CBC News 

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