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What the U.S. EV tax credit means for Canada

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Episode 129 of Down to Business podcast

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Last week, as Prime Minister Justin Trudeau visited Washington, D.C., the U.S. House of Representatives passed a sprawling nearly US$2 trillion infrastructure bill that addresses many issues but leaves some Canadians concerned: One provision in the bill, in its current draft, eventually would give U.S. consumers a tax credit of up to US$12,500 if they purchase an electric vehicle made in the U.S. by union workers.

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This week on Down To Business, Flavio Volpe, president of the Automotive Parts Manufacturers Association of Canada, spoke about what the tax credit means for this country — where many global automakers assemble vehicles that are eventually sold in the U.S.

Volpe said the tax credit, which would incentivize automakers to build EV assembly plants in the U.S., flies in the face of the Canada-U.S.-Mexico trade agreement, which envisioned an integrated North American supply chain for automobiles. Indeed, the three countries’ auto sectors have been integrated for decades.

But the U.S. Senate still needs to pass its own version of the bill, and Volpe predicted the tax credit would ultimately be dropped. The discussion touched on a range of issues, including the ambitious government policies to accelerate the adoption of electric vehicles, the decline of U.S. manufacturing and the rise of China.

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