A Democrat deal, agreed to by Senate Majority Leader Chuck Schumer (D-CA) and Sen. Joe Manchin (D-WV), subsidizes electric vehicles made in Canada and Mexico — gutting the “Buy American” rules initially included in the legislation.
The Democrats’ “Inflation Reduction Act,” estimated to eliminate about 30,000 jobs in the United States, is set to be a major win for Mexico and Canada’s auto industries as well as the multinational corporations that outsource U.S. auto jobs to each of the countries.
A provision originally included in the legislation initially gave thousands in tax credits to American consumers buying electric vehicles that are made in the U.S. Though the credits go directly to consumers, they are a boon for automakers as they subsidize sales.
The goal, as with most Buy American rules, was to pressure automakers to reshore auto manufacturing to the U.S. and open state-of-the-art electric vehicle plants.
That provision, though, was changed to ensure that electric vehicles made in Mexico and Canada can also qualify for the tax credits. The Canadian government has claimed victory with the change, noting that the credits will be a boost for their industry:
“It took Team Canada advocacy for us to get here,” [Canadian Trade Minister Mary] Ng said in an emailed statement. “Since the Prime Minister’s first meeting with President Biden last year, we have been relentless in underscoring that the original proposal would be harmful to both Canada and the US, so we’re glad to see that recognized in the new version of the bill.” [Emphasis added]
Canadian officials had made a major diplomatic effort over the winter to argue the original version would roll back decades of integration in the North American auto sector. Mexico’s government also slammed the initial proposal, calling it self-defeating for the US. [Emphasis added]
Now, Democrats are looking to go even further in terms of benefitting corporate outsourcers of U.S. jobs. Automakers with production in China are lobbying to gut provisions that prevent the tax credits from being used on electric vehicles made with Chinese batteries.
Sen. Debbie Stabenow (D-MI) wants the legislation to subsidize corporations that source their electric vehicle batteries from China, Russia, and other foreign countries with strained U.S. relations.
“Unfortunately after [the tax credits are] implemented … at this point, it looks like companies won’t be able to use them,” Stabenow said.