US Democrats Senator Chuck Schumer and Senator Joe Manchin have agreed to propose repealing a tax credit plan that favored American-made electric vehicles.
Instead, the Senate Majority Leader and the West Virginia moderate are proposing an amendment to Joe Biden’s climate and health bill that would expand the credits across North America.
To be eligible for the credits, the amendment also requires vehicle batteries to contain a certain percentage of material sourced from US “free trade” partners.
The legislation is still a long way from passage — sure to anger Senate Republicans, who will be reluctant to hand Democrats a legislative victory with midterm elections looming in November.
Manchin is a key vote in the evenly divided Senate, but the bill, expected to reach the Senate floor next week, still needs 60 votes to avoid Republican filibuster tactics.
“I am very pleased to see that our message was heard and reflected in the bill,” Kristen Hillman, Canada’s ambassador to the US, said in a statement.
Canada has been “relentless” in its efforts to get Congress and the White House to abandon a plan “that discriminates against Canada and breaks up our highly successful integration of the auto sector,” Hillman said.
“We’ve all brought the facts to the table.”
Just two weeks ago, Schumer and the inflation- and China-wary Manchin appeared deadlocked over Biden’s climate and health care bill, a scaled-down version of the ambitious $2 trillion social spending effort known as Build Back Better.
Instead, they stunned Washington officials late Wednesday with a $700 billion deal that includes a raft of spending measures for climate and energy projects, deficit reduction, prescription drugs and health insurance premiums.
“The investments will be fully paid for by closing tax loopholes for wealthy individuals and corporations,” the senators said in a statement.
“The Inflation Reduction Act of 2022 will make a historic advance on deficit reduction to fight inflation, invest in domestic energy production and processing, and reduce carbon emissions by about 40 percent by 2030.”
Biden, a self-proclaimed champion of “Buy American protectionism” and organized labor, initially wanted to save richer tax incentives for electric vehicles assembled in the U.S. with union workers.
Since then, the federal government, the Canadian embassy and stakeholders from across the Canadian auto sector have been lobbying against the plan at every turn.
“This is a great example of how to raise critical bipartisan issues with Americans and achieve results by focusing on solutions that benefit them,” said Flavio Volpe, president of the Toronto-based Auto Parts Manufacturers Association.
That meant demonstrating — again and again — the interconnected nature of the cross-border auto sector to drive home a simple point: that incentivizing only US-made electric vehicles would be little more than a self-promotional shot in the foot.
Every American-made auto maker, to say nothing of the companies that provide parts, materials, tools and equipment, would feel the pain, Volpe said — and the U.S. would suddenly be without a vital competitive advantage in the global marketplace.
“When the U.S. targets Canadian industrial capacity, especially in electric vehicle production, lawmakers are hindering their country’s ability to compete with China.”
This report by The Canadian Press was first published on July 28, 2022.
