US Inflation Bill Extends Tax Credit to Electric Vehicles Made in Canada


A new plan to encourage Americans to buy more electric vehicles made in North America, rather than just the United States, has cleared the country’s highest roadblock.

After a marathon voting session that lasted more than 24 hours, the US Senate finally passed the new Inflation Reduction Act of 2022.

Vice President Kamala Harris had to break the 50-50 tie to pass legislation, a significantly smaller version of President Joe Biden’s signature $2 trillion environmental and social spending package.

The original proposal gave the most tax credits to vehicles assembled in the US with union involvement – a plan expert said would affect Canada’s auto industry.

But Senate Majority Leader Chuck Schumer has reached an agreement with Senator Joe Manchin of West Virginia on a version of the bill that would extend credit to vehicles built in Canada and Mexico.

The bill is expected to win approval in the Democratic-controlled House of Representatives next week before moving to the president’s desk.

“It’s been a long, difficult and winding road, but in the end, we’ve finally got there,” Schumer said Sunday when the results were out of the question.

“I am confident the Inflation Reduction Act will survive as one of the defining legislative measures of the 21st century.”

The bill spends $389 billion on measures to combat climate change, while limiting drug costs for the elderly, expanding health insurance benefits and reducing the deficit.

Climate measures also include incentives to build clean energy equipment such as solar panels and wind turbines, reduce pollution levels in minority communities, and expand factory operations- Greener farm.

Republicans, whose series of proposed amendments were wiped out through Saturday night and into Sunday, saw their defeat as a victory for higher taxes, more inflation and moving on. dependent on foreign energy.

Senate Minority Leader Mitch McConnell said: “Democrats have been robbing American families through inflation. “Now their solution is to rob the American family a second time.”

Tax credits – which also require qualifying vehicles to have a percentage of key North American minerals in their batteries – are hardly in the US debate. Critics say it will take years for consumers to benefit.

But for the Canadian auto industry, the stakes are huge.

Flavio Volpe, president of the Auto Parts Manufacturers Association, is just one part of a year-long joint effort by industry, the Ontario and Ottawa governments to convince US legislators and other stakeholders. Biden administration officials declined.

“It’s a cigar. It’s always been a cigar,” Volpe said when asked how to mark the event.

“During the trade war, by the time it’s officially over, everyone else has moved on to the next issue of the day. I’ve had so many quiet cigars, it’s become my ritual.”

Manchin, a Senate-turning vote from a state where Toyota is a major manufacturer, has long opposed the idea of ​​removing foreign automakers from EV incentives — but it wasn’t clear until next week. before whether that pays a Canadian dividend.

The surprise deal he forged with Schumer marks the culmination of an active lobbying effort that began with Prime Minister Justin Trudeau’s visit to the White House in November.

Federal government officials say it has been confronted in scope solely by the 2017-18 NAFTA negotiations, the high-stakes Trump-era negotiations that created the flood-area diplomacy strategy now under called the “Canadian Group” approach.

It targeted a wide range of US officials and lawmakers, and involved at least one face-to-face meeting in recent months between Manchin and Deputy Prime Minister Chrystia Freeland.

This Canadian Press report was first published on August 7, 2022.

With files from the Associated Press

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