Canada's transport minister was in Washington to fight proposed EV tax credit

WASHINGTON — Transport Minister Omar Alghabra says he is detecting a positive "shift" in the Biden administration's approach to Canada following meetings in the U.S. capital, where he continued to rail against a proposed federal EV tax credit in that country.

Alghabra spent Tuesday in Washington, D.C., with officials including U.S. counterpart Pete Buttigieg and senior White House adviser Mitch Landrieu.

He says Russia's war in Ukraine has put a new frame around the administration's relationships with important trading partners, including Canada.

Alghabra says he reiterated Canada's opposition to President Joe Biden's original plan to put extra tax incentives on electric vehicles assembled in the U.S.

That version of the plan collapsed in December when Sen. Joe Manchin declared his opposition to Biden's US$2-trillion Build Back Better bill.

The White House is working on a scaled-down version, but it remains unclear whether the tax credits, which Ottawa has warned would be a body blow to Canada's auto sector, will return in their original form.

"There is, I think, a new frame for the conversations that are taking place in the U.S.," Alghabra said in an interview.

"While I don't know what the future of the previous EV tax credit is in the U.S., I am hopeful that I think now we're entering into a new type of discussion."

Manchin, the moderate Democrat from West Virginia who has emerged as a key vote in the evenly divided Senate, suggested recently that he would not support any measure that would harm Canada's auto industry.

Manchin, who heads the Senate's energy and natural resources committee, hosted Jason Kenney when the Alberta premier testified in person on Capitol Hill earlier this month.

The pair have become cross-border allies as the U.S. looks for ways to both combat inflation while reducing its dependence on fossil fuels from hostile regimes, while Kenney continues to prod the Biden administration to depend more on Canada for its short-term energy needs.

After the May 17 hearing, Manchin said he expects the White House is still working on some sort of a program to encourage American consumers to buy more electric vehicles and ease U.S. dependence on gasoline.

But he insisted that he wouldn't support any measure that would hurt automakers north of the border.

"There's no way in the world that we're going to put that type of harm and allow that to happen," Manchin said. "My vote would never support that at all."

Manchin and Kenney both voiced support for the idea of a more closely integrated Canada-U.S. energy "alliance." It would focus on the need for traditional energy in the short term, as well as reliable bilateral supply chains for the critical minerals so essential to the production of electric vehicles.

Alghabra said the role Canada could play in buttressing U.S. supply chains for those minerals is also generating increased interest south of the border.

"We have more of those critical minerals, and some types of the critical minerals that the U.S. doesn't have," he said.

"There's a new sense of interest and intrigue about this new frame that I think maybe did not exist last year."