Canada’s automotive industry is gearing up for a fight over the US$12,500 EV incentive, which applies only to U.S.-made, union-made vehicles. The federal Liberals are threatening a full contingent of trade remedies, ranging from court fights and challenges before the World Trade Organization, to retaliatory tariffs.
“I think the Americans understand, if they do their homework on NAFTA and TPP [Trans Pacific Partnership trade pact], you can bank on us to do what we say,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association (APMA). “They do know we’ll follow through.”
Volpe expects to spend considerable time traveling to Washington to meet with Republican and Democrat legislators in Congress. He’s not confident of success, at least unless the 2022 U.S. midterm election leads to a shift in power favouring the Republicans, who appear to oppose the EV incentives.
That we’re here at all, with a different president, is and isn’t a surprise, he said.
“On one hand, we knew we had a crazy president yelling at the moon,” Volpe said. “Now, we have a rational actor looking us in the eyes, knowing what he’s proposing is injurious to us and still following through.”
There’s little doubt the incentive violates provisions of the United States-Mexico-Canada Agreement (USMCA), said David Adams, president of the Global Automakers of Canada (GAC). His organization represents foreign automakers such as Honda and Toyota.
“It amounts to a 34-per-cent tariff against Canadian-made vehicles. That’s higher than the [25-percent tariff on Canadian cars] threatened by protectionist president [Donald Trump].”
“The real struggle — and [Canada is] collateral damage — is between the U.S. and China,” Adams said. “China is significantly advanced from where the U.S. is [on EVs], and the U.S. is trying to recapture some of that dominance.”
Although Unifor President Jerry Dias favours a government’s prioritizing the employment of its own citizens, “you can’t commit suicide while you’re doing it,” he said.
“We’re dealing with issues that don’t make a stitch of sense,” said Dias, whose union represents Canadian workers at the Detroit Three plants.
“We thought that the adult finally got elected. No question, 2022 will make the Trump era look mild in comparison.”
Canada’s supply of raw materials for electrification — nickel, cobalt and magnesium — constitutes another bargaining chip in the country’s favour, said Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association (CVMA), which represents the Detroit Three automakers.
It’s especially important, given Canada’s commitment to workers’ rights and opposition to child and slave labour and the movement of automakers to demonstrate ethical business practices throughout the manufacturing process, Kingston said.
“My key point is — while the U.S. needs to look at its own security — Canada is the best and most reliable partner the U.S. can have. We happen to have a significant endowment of raw materials. There’s no better country to be partnering with.”
CHIPS ON THE TABLE