Canadian Manufacturing

‘Buy American’ to become ‘Buy North American’: U.S. deal amends EV tax credits to include Canada

The Canadian Press

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To be eligible for the credits, the amendment would also require that vehicle batteries contain a certain percentage of material sourced from U.S. "free trade" partners.

The existential crisis confronting Canada’s automotive industry may finally be over.

U.S. Democrats Sen. Chuck Schumer and Sen. Joe Manchin have agreed to propose doing away with a tax-credit plan that favoured 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 to include all of North America.

“This is good news for Canadian workers, jobs and our manufacturing industry,” Trade Minister Mary Ng said in a statement on Jul. 28.


“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 U.S., so we’re glad to see that recognized in the new version of the bill.”

To be eligible for the credits, the amendment would also require that vehicle batteries contain a certain percentage of material sourced from U.S. “free trade” partners.

The legislation is still a long way from passing — it’s sure to infuriate Senate Republicans, who will be reluctant to give Democrats a legislative win with midterm elections looming in November.

Manchin is a pivotal vote in the evenly divided Senate, but the bill, expected to reach the Senate floor next week, will still need 60 votes to avoid Republican filibuster tactics.

“I am very pleased to see that our message has been heard and is reflected in the draft legislation,” Kristen Hillman, Canada’s ambassador to the U.S., said in a statement late on Jul. 27.

Canada has been “relentless” in its efforts to convince Congress and the White House to abandon a plan “that discriminates against Canada and fractures the highly successful integration of our auto sector,” Hillman said.

“We have all brought the facts to the table.”

Just two weeks ago, Schumer and the inflation-and-China-wary Manchin appeared at an impasse over Biden’s climate and health care spending bill, a shrunken version of the ambitious $2-trillion social spending endeavour known as Build Back Better.

Instead, they stunned official Washington late Wednesday with a $700-billion agreement that includes a raft of spending measures for climate and energy projects, deficit reduction, prescription drugs and health premiums.

“The investments will be fully paid for by closing tax loopholes on wealthy individuals and corporations,” the senators said in a statement.

“The Inflation Reduction Act of 2022 will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 per cent by 2030.”


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