Canadian Prime Minister Justin Trudeau and Mexican President Andrés Manuel López Obrador came to Washington to meet President Joe Biden this week angry about his backing the Democrats’ plan to give tax breaks to Americans who buy electric vehicles.
Canada and Mexico strongly oppose the electric-vehicle tax credit, which the countries warn would damage their auto sectors and undermine the new United States-Mexico-Canada trade agreement. For Trudeau, warning U.S. officials about the fallout of Biden’s electric vehicle proposal was a top objective during his two-day visit to Washington.
“We underlined to what point this would be a big problem for auto production in Canada,” Trudeau said at a news conference late Thursday after trio met. “We very clearly underlined our position.”
Politico reported that the tensions between the “three amigos” overshadowed the first meeting of the North American leaders since 2016.
When Biden was asked about the electric car tax credit, he said it might not survive in Congress.
“We don’t know what will happen in the Senate, but there’s a lot of complicating factors,” Biden said when he was asked by reporters about the proposal. “We’re going to talk at length about it, I’m sure.”
The provision would provide consumer tax credits of $4,500 for electric vehicles made with union labor in the U.S., on top of other credits for the clean cars. That would disadvantage a number of foreign automakers, like Toyota, Volkswagen and Honda, which operate in nonunion states and have loudly opposed the measure. But it would allow Biden to deliver a tangible victory for organized labor, one of his major constituencies, as well as workers in Midwestern states like Michigan that will be crucial for his reelection.
Chrystia Freeland, Trudeau’s deputy prime minister, told reporters Wednesday that the proposal had the potential to become the “dominant issue” in the Canada-U.S. relationship. She said Trudeau told top Republicans and Democrats from the House and Senate on Wednesday that Canada is “certain” that the incentives, as currently formulated, would violate the USMCA.
“Do you really want to violate it in such a significant way so soon after its passage?” Freeland said. “That was one of the points we made. I think they heard us.”
Speaking on behalf of the Biden administration, White House press secretary Jen Psaki defended the policy proposal.
“We don’t view it that way [as a violation of USMCA],” Psaki told reporters. “In our view, the EV tax credits are an opportunity to help consumers in this country. It’s not the first time there have been incentives and tax credits for consumers, to lower prices for consumers [and] help incentivize a move toward a clean energy industry.”
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