A Canadian delegation sent to Washington to compel American lawmakers to kill a protectionist proposal by President Joe Biden returned to Canada saying progress was made, even though its U.S. counterpart made no promise to kill the tax credit.

The electric vehicle (EV) tax credit is part of the Build Back Better Act, an omnibus bill Democrats passed through the House of Representatives and are now trying to get through the Senate.

The legislation includes $1.75 trillion in spending to fulfill many of Biden’s election promises to mitigate climate change and improve the country’s health and social programs.

The proposed tax credit doesn’t just incentivize people to buy EVs; it also encourages them to buy cars that are made in the U.S. with American- and union-made cars. To eventually qualify to receive 40 per cent of the $12,500 tax credit, someone must buy an electric vehicle that meets both those requirements — which would effectively discourage Americans from buying Canadian cars.

The Build Back Better Act was introduced in Congress in late September. After reforming government and naming his cabinet, Prime Minister Justin Trudeau’s Liberals have zeroed in on the EV tax credit in their dealings with the U.S.

Mary Ng, Canada’s minister of international trade, export promotion, small business and economic development, led a Canadian delegation to Washington last week for three days of meetings with American officials to advocate against the tax credit, which Canada’s government feels violates the renegotiated NAFTA agreement (USMCA).

Ng was joined by Canadian consuls general from around the U.S., government staff, and opposition MPs, including Randy Hoback, of the Conservatives, and Daniel Blaikie, of the NDP.

Ng’s office said she was unavailable to be interviewed about how the trade mission went, but her spokesperson, Alice Hansen, said in an email that it was "productive" and that "several (U.S) senators have agreed to look into this issue further."

Both Hoback and Blaikie spoke to iPolitics about how it had gone.

Blaikie and Hoback said that all of the numerous Congress members they met with were receptive to the Canadian delegation’s concerns.

“Nobody was giving a hard no,” Blaikie said. “But … a lot of them seemed to be finding out about this for the first time.”

Hoback said similarly — that a lot of his time meeting with members of Congress was making them “aware” of how the EV tax credit could hurt Canada, which they hadn’t realized before.

“I don’t think anybody consciously put that in there to hurt Canada,” Hoback said. “I think what’s happened is they’ve just been made aware of the negative consequences of that being part of this bill and not being sure how to fix it. I think there’s lots of goodwill here — it’s just whether they have the ability to fix it in time.”

Blaikie and Hoback met mostly with Republicans, who will almost certainly vote against Biden’s bill, but don’t control enough seats in either chamber to stop it from passing. Blaikie felt this amounted to an inefficient use of their time, and blamed the government for planning the trip last minute. He thought the entire delegation’s time would have been better served meeting with more Democrats, who have more control over whether the EV tax credit passes in the final version of the bill or if it’s removed or modified.

However, Blaikie and Hoback both agreed that Canada’s case was improved as a result of the trip.

Impact to Ontario

The North American auto-manufacturing industry has become increasingly intertwined since NAFTA took effect in 1994, and the three countries in the continent are all major vehicle-makers; Canada makes the 12th-most cars in the world, while the U.S. is No. 2 and Mexico is No. 7.

The average Canadian-made car will contain about 50 per cent of American-made parts, according to Global Affairs Canada. Also, each year, Canada imports over US$22 billion worth of U.S. auto parts from the U.S., and US$23 billion of vehicles — which is about 10 per cent of all cars made in the U.S. and makes Canada the top market for American auto exports.

Ontario is home to over 100,000 auto-manufacturing jobs, which is around 90 per cent of Canada’s total, making its industry most vulnerable to the brunt of Biden’s EV tax credit.

One of Premier Doug Ford’s spokespeople told iPolitics she wasn’t aware of any invite by the federal government to Ontario’s government to have Ontario representatives on last week’s trip. The Ontario government also doesn’t currently have a representative in Washington after the three-year term of Ford’s first appointee, Ian Todd, ended in October.

Still, the Ontario government’s “entire network” in the U.S., including the remaining staff at its D.C. office, “is working with our Canadian federal partners, as well as U.S. counterparts, stakeholders and industry on this critical issue (the EV tax credit) to the Ontario-U.S. relationship,” said Rebecca Bozzato, a spokesperson for Ontario’s Economic Development, Job Creation and Trade Minister Vic Fedeli.

Fedeli also recently met with Kirsten Hillman, Canada’s ambassador to the U.S., to emphasize how important it is to ensure supply chains and trade between Ontario and the U.S. isn’t interrupted, Bozzato said.

He also sent a letter to the Democratic and Republican leaders in both houses of Congress on Oct. 26 laying out Ontario’s case for why the proposed EV tax credit should be canned.

“The Government of Ontario is keen to ensure that any U.S. policies related to EVs … allow manufacturers and investors throughout the supply chain to continue to locate in both Canada and the United States, in order to take advantage of the opportunities created by the USMCA,” said Fedeli, adding that the provincial government would support challenging the tax credit under the trade deal.

Team Canada trip to kill U.S. EV tax credit sees some progress

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