‘American’ Electric Vehicle Tax Credit Bill Passes US Senate

WASHINGTON-

The new plan to encourage Americans to buy more electric vehicles built in North America, rather than just in the United States, has passed its highest hurdle yet.

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

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

The original proposal reserved the largest tax credits for vehicles assembled in the US with unionized labor, a plan that experts say would have hurt Canada’s auto industry.

But Senate Majority Leader Chuck Schumer struck a deal with West Virginia Sen. Joe Manchin on a version of the bill that extended the credits to vehicles made in Canada and Mexico.

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

“It’s been a long, hard and winding road, but finally, finally we have arrived,” Schumer said on Sunday when the result was no longer in doubt.

“I am confident that the Inflation Reduction Act will endure as one of the defining pieces of legislation of the 21st century.”

The bill dedicates $389 billion to measures to combat climate change, while also capping drug costs for seniors, extending health insurance benefits and reducing the deficit.

The climate measures also include incentives to build clean energy equipment like solar panels and wind turbines, reduce pollution levels in minority communities, and expand greener factory farm operations.

Republicans, whose barrage of proposed amendments were crushed overnight Saturday and into Sunday, framed their defeat as a victory for higher taxes, more inflation and a continued reliance on foreign energy.

“Democrats have already robbed American families once through inflation,” said Senate Minority Leader Mitch McConnell. “Now their solution is to rob American families a second time.”

The tax credits, which also require eligible vehicles to have a percentage of critical North American minerals in their batteries, have hardly been part of the debate in the United States. Critics say it will be years before consumers can benefit.

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

Flavio Volpe, president of the Auto Parts Manufacturers Association, was just one part of a year-long effort by industry, the Ontario government and Ottawa to convince US lawmakers and officials in the Biden administration to that they withdraw.

“It’s a cigar. It’s always a cigar,” Volpe said when asked how he would mark the occasion.

“In trade wars, when they’re officially over, everyone else moves on to the next issue of the day. I’ve smoked so many light smokes that it’s become my ritual.”

Manchin, a swing vote in the Senate from a state where Toyota is a major automaker, had long opposed the idea of ​​leaving foreign automakers out of incentives for electric vehicles, but he was unclear until last week. passed if that would pay dividends for Canada.

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

Federal government officials say it was rivaled in scope only by the 2017-18 NAFTA talks, the high-stakes Trump-era negotiations that forged the diplomatic strategy of flooding the area now known as the “Team Canada” 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 report from The Canadian Press was first published on August 7, 2022.


With files from The Associated Press

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