Ontario dealers association opposes proposed U.S. EV tax credit it calls ‘discriminatory’
The Trillium Automobile Dealers Association (TADA), which represents about 1,100 new-vehicle dealers in Ontario, is the latest to deride U.S. President Joe Biden’s proposed electric-vehicle rebate.
TADA has written to leaders of the U.S. Senate, urging them to reject what the association calls “discriminatory tax credits for Canadian-assembled electric vehicles (EVs).”
Under the U.S. proposal, American-made EVs would be eligible for up to US$12,500 in tax credits to a prospective buyer. Electric vehicles built in Canada would not qualify and therefore essentially cost more south of the border. The rebate is a small part of the Build Back Better Act. The legislation has passed in the House of Representatives and is now before the Senate.
According to the Canadian government, the proposal amounts to a 34-per-cent tariff on electric vehicles assembled in Canada and violates the terms of the United States-Mexico-Canada Agreement, or USMCA, the Canadian Press reported earlier this week.
In a letter to Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell, TADA says the proposed EV tax credits will destroy the integrated North American auto supply chain Canada and America have built since signing the Auto Pact in 1965.
“The TADA believes EV tax credits should not discriminate against Canadian-assembled vehicles. Our integrated North American supply chain creates jobs on both sides of the border and should be protected,” Frank Notte, TADA’s director of government relations, said in a statement. “We are hopeful the U.S. Senate will reject these discriminatory EV tax credits and force amendments exempting Canadian-assembled vehicles.”
In a letter to Senate leaders, Deputy Prime Minister Chrystia Freeland and International Trade Minister Mary Ng threatened retaliatory tariffs should the rebate pass. TADA wants Canada to avoid applying tariffs.
“Ontario new car dealers don’t want a trade war resulting in higher prices for new vehicles. We hope senators will reject these discriminatory tax credits and help focus Congress and the president on the main goal – putting EVs on the road to reduce emissions. An EV assembled in Canada is just as good for the environment as an EV assembled in America,” Notte said.
Freeland and Ng’s letter note Canadian-assembled vehicles contain approximately 50 per cent U.S. content and Canada imports over $22 billion worth of automotive parts from the U.S. annually. These parts come from suppliers in numerous states, including Michigan, Ohio, West Virginia, Virginia, Indiana, Kentucky, Illinois and New York, among others.
TADA’s letter cites recent examples of both Democratic and Republican administrations exempting Canada from harmful trade policies. In 2002, President Bush exempted Canadian-made steel from a 30-per-cent tariff. And in 2010, President Obama exempted Canada from “Buy American” provisions, TADA said.
TADA’s letter also notes the role Ontario’s mining sector could play as North America transitions to EVs.
“Ontario has deposits of minerals and metals required for EV batteries and parts including cobalt, graphite, lithium and nickel,” the letter says. “By not discriminating against Canadian made products, we can secure our North American EV supply chain and decrease our dependence on less dependable trading partners.”