Canadian Prime Minister Justin Trudeau returns to Ottawa on Friday after failing to convince President Joe Biden to scrap proposed electric-vehicle tax credits that would favour U.S.-based manufacturers, but said he would keep seeking a solution.
Democrats in the U.S. House of Representatives worked into the night to pass Biden's US$1.75 trillion domestic investment bill that includes the tax credits that Canada fears will undercut its own efforts to produce electric cars. The bill then will go to the Senate.
"The Americans are very aware of Canada's position on this, and our concerns around it, and quite frankly, the threats it poses to over 50 years of integrated automaking in our two countries," Trudeau told reporters late on Thursday after meeting Biden at the White House.
"There are a number of ways to look at solving this," Trudeau said without elaborating, adding that Canada would continue to push to "find solutions".
Flavio Volpe, head of the Automotive Parts Manufacturers’ Association said the U.S. government is “handing Canada the permission to retaliate where it hurts, like with battery raw materials,” of which Canada has plenty.
Volpe called the Biden Administration’s refusal to nix the tax credit “senseless bravado.”
The House of Representatives is voting on a social spending and climate bill that includes a tax credit from 2027 for U.S.- made electric vehicles that Canadian manufacturers say will cost jobs and undermine the deeply integrated North American auto industry.
Canada's industrial heartland of Ontario is geographically close to U.S. automakers in Michigan and Ohio.
The tax credit issue was the first Trudeau brought up in his meeting with Biden on Thursday, a government source said, and Finance Minister Chrystia Freeland on Wednesday warned the issue risks becoming the dominant bilateral issue between the two countries.
Canada says the tax credit would violate rules under the USMCA (United States-Mexico-Canada Agreement). The White House insisted on Thursday that it does not. Canada has said it would retaliate if the tax credits are passed.
Trudeau, who was in Washington to attend the first meeting between the leaders of the U.S., Canada and Mexico in five years, said he discussed other contentious issues with Biden, such as his 'Buy American' provisions and Michigan's push to shut down Enbridge Inc.’s Line 5 oil pipeline, but found no solutions.
There was "no definitive win for Canada," said the Canadian Chamber of Commerce, and the Conservative Party opposition said the failure showed "Canada's relationship with the United States has declined under Mr. Trudeau".
Trudeau had a rocky relationship with former President Donald Trump, who once called him "dishonest and weak", and he hailed Biden's election.
But Biden canceled an oil pipeline from Canada to the U.S. that Trudeau supported on his first day in office, and Washington has announced plans to double duties on imports of Canadian lumber and requested a dispute panel on Canada's dairy import quotas.