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Trade threats from Canada? U.S. Democrats are busy fighting their own internal battles

Intra-party power struggle threatens to delay Build Back Better bill causing Canada-U.S. tiff

U.S. Sen. Sherrod Brown, seen here Wednesday, when asked about Canada's complaints over a proposed tax break on electric vehicles, said: 'I don't care.'

U.S. Sen. Sherrod Brown, seen here Wednesday, when asked about Canada's complaints over a proposed tax break on electric vehicles, said: 'I don't care.'

Photo: (Elizabeth Frantz/Reuters)

RCI

Here's a blunt reply from one U.S. senator when asked about an extraordinary threat-filled (new window) letter from the Canadian government.

I don't care, Sherrod Brown, a Democrat from Ohio, told CBC News on his way into the Senate chamber on Wednesday.

Canada's letter threatened to apply tariffs and suspend bits of the USMCA trade deal if U.S. lawmakers press ahead with a tax credit that subsidizes electric vehicles assembled in the U.S.

Fearing the plan could kill assembly plants in Canada, Ottawa calls it discriminatory and a violation of international trade agreements — and at least some analysts agree (new window).

When asked about the letter, Brown motioned to the chamber a few steps ahead of him and said what he cares about is undoing past trade policies enacted by the Senate.

I don't care about other countries being upset, he repeated. Other countries were really happy — China and American corporations were really happy — when that body continued to outsource jobs. And we're finally starting to fix it. 

So I don't really care what Canada thinks. I care about the effect on American workers.

Brown's reaction is an example of the shifting political winds in Washington, and its cooler attitude toward trade. 

He's one of the more protectionist U.S. lawmakers, an industrial-belt Democrat from a traditional swing state, and his attitude is ascendant within the current Congress and its Buy American bonanza.

But Washington's eyes aren't on Brown this week.

They're on another senator threatening not just the electric-vehicle credit but everything Democrats want to achieve in this rare moment, when they control Congress and the White House. 

WATCH | Tension over tax break:

As Canada is threatening U.S. Democrats with a trade war, U.S. Democrats are busy fighting internally. At the epicentre of that intra-party power struggle? West Virginia Sen. Joe Manchin.

It seems likely to last a while — certainly into 2022.

Democrats sound increasingly pessimistic about passing the bill by their original target date before the holidays, which will leave the Canada-U.S. irritant unresolved into the new year.

Negotiations have hit a snag between Manchin, other Democrats and the White House. He's begun demanding additional cuts, much bigger cuts (new window), to the $1.75 trillion US price tag of the Build Back Better legislation.

Democrats had already slashed the bill in half to win Manchin's critical support and now he's calling for a new, stricter way of calculating the legislation's cost.

With their agenda foundering, Democrats are talking about leaping to other priorities in the meantime, like potentially an election-reform bill.

Sen. Ron Wyden has insight into all of this — and into the irritant with Canada. 

It's no accident the Oregon Democrat was one of the eight senators (new window) who received last week's letter from Deputy Prime Minister Chrystia Freeland and Trade Minister Mary Ng.

He heads the powerful finance committee that advanced key bits of the legislation, including a precursor (new window) bill that first proposed (new window) the electric-vehicle credit.

He said the negotiations about what to include were hard-fought and the electric-vehicle component was an essential part.

It was a very challenging bill, he said.

Does that mean Canada's out of luck? That these tax credits will stay as is? Wyden wouldn't go that far.

We're going to continue the negotiations, he said. I'm going to continue to push very hard for what we negotiated in the committee. It was a big lift. 

We're just going to keep talking about it.

The problem for Democrats is that the talking has dragged on, and on, and on, for months, and if just one member of their party were to quit, suffer a health setback, or oppose the package, it could be doomed, and with it, hopes to pass a historic 2,468-page (new window) bill that touches clean energy, child care, pre-K school, drug costs and taxes.

In the meantime, Wyden is hoping to get his party to advance a small piece of Build Back Better: extending a child-poverty tax credit (new window) that's set to expire this month.

Wyden said the cash in that program helps families in desperate need. He mentioned the cold and wet weather in his own state and how some struggle to buy kids' clothes.

Just buying shoes for kids, he said. [This assistance] is a lifeline.

Another senator who's been courted by Canada on the irritant was non-committal Wednesday.

U.S. President Joe Biden talked to autoworkers after touring the General Motors 'Factory ZERO' electric vehicle assembly plant in Detroit last week.

U.S. President Joe Biden talked to autoworkers after touring the General Motors 'Factory ZERO' electric vehicle assembly plant in Detroit last week.

Photo:  (Jonathan Ernst/Reuters)

It takes one Democrat

Canada is hoping that a southern Democrat, from a state with non-union plants, might help modify the provision as it was written to favour Michigan's union plants. 

And that's why Ng met during her recent trip to Washington with Georgia Sen. Raphael Warnock, hoping to persuade him.

Sources say Warnock was sympathetic in that meeting but non-committal in addressing Canada's complaint.

That's the note he struck Wednesday when asked by CBC News about the meeting and the vehicle tiff with Canada.

We had a good meeting. And we'll see, he said. I think we want to do everything we can to encourage our clean-energy production

Republicans agree with Canada

The bottom line: There are 50 Republicans in the 100-seat Senate who would be delighted to help modify, or kill entirely, this electric-vehicle provision.

Frankly, I'm on exactly the same page as Deputy Prime Minister Freeland and Minister Ng, Republican Sen. James Risch, who also received Canada's letter, said in a statement.

This ill-conceived provision would do significant harm to the U.S.-Canadian relationship in favor of short-sighted climate goals. If someone really cares about climate politics, the focus should be on emissions reductions, not on unionized shops only in the US … I do not and will not support it.

Some Republicans are working on the wording of potential amendments — although their specific details and their level of favourability to Canada are yet to be determined.

Now all they need is one Democrat to join them.

That uncertainty will likely linger, as Canada's auto country wonders what 2022 has in store.

Georgia Democrat Raphael Warnock.

Canada is hoping one senator from a southern state disadvantaged by the measure might get it changed. That's why Canadian officials recently met with Georgia Democrat Raphael Warnock.

Photo: Reuters

Alexander Panetta (new window) · CBC News

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