Encouraging electric vehicles: U.S. Buy American policies threaten Canadian auto worker jobs

U.S. President Biden’s Build Back Better Act passed the U.S. House of Representatives in November, including  incentives to encourage adoption of electric vehicles: a consumer tax credit of $7,500 for electric vehicles made in the U.S., and an additional $4,500 tax credit if the vehicle was made with union labour.  The news was welcomed by U.S. auto workers’ union UAW, but in Canada, workers and the government are alarmed. A press release from Unifor, the Canadian auto workers’ union, is titled “President Biden needs to realize he is shooting U.S. auto sector in the foot” , stating: “The fact is U.S. assembly plants couldn’t survive without the engines and other components we make here. ….. For that matter, he can’t build a sustainable BEV industry without the nickel, cobalt, manganese and other minerals coming out of Canada, either.” The business-oriented Financial Post published “Why America’s rush to EVs might kill the entire Canadian auto parts business”. As reported by CBC News, federal government officials have threatened retaliatory trade measures, arguing that the Buy American provisions amount to a 34 per cent tariff on electric vehicles assembled in Canada and violate the terms of the U.S.-Mexico-Canada Agreement (USMCA) .  An alternate solution is described in  “Canada willing to ‘align’ EV incentives with U.S. to avert tax-credit crisis: Trudeau” (Toronto Star, Dec.13).  CTV  News offers an Explainer which also summarizes reactions from government, industry, and labour. 

In Ontario, where most Canadian auto jobs are located,  the provincial government announced on December 9 the creation of the Premier’s Council on U.S. Trade and Industry Competitiveness, to be chaired by Unifor National President Jerry Dias, working with the Minister of Economic Development, Job Creation and Trade. From the press release: “This new Council, with the full support of our government, will continue to advocate for Ontario against unfair Buy American policies by highlighting the cost of protectionism to businesses on both sides of the border and promoting a Buy North American approach to our auto sector.” 

On October 17, Ontario had announced Phase 2 of its Driving Prosperity – The Future of Ontario’s Auto Sector  policies “to secure production mandates for hybrid and electric vehicles, create a domestic battery ecosystem, and strengthen Ontario’s position as a North American automotive and electric vehicle (EV) innovation hub.”   To date, the Ontario government strategy has been to incentivize manufacturers but resist the kinds of consumer incentives Biden has proposed, as described in “Doug Ford talks big on EVs but won’t reintroduce rebates”  (National Observer, Dec. 13).

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