A Democratic 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 – eviscerating the “Buy American” rules initially included in the legislation.
The Democrats’ ‘Inflation Reduction Act’, which is expected to eliminate about 30,000 jobs in the United States, should be a major victory for the Mexican and Canadian auto industries as well as the multinational companies that contract out jobs American automobiles in each country.
A provision originally included in the legislation initially granted thousands of tax credits to American consumers purchasing electric vehicles made in the United States. Although the credits go directly to consumers, they are a boon to automakers because they subsidize sales.
The goal, as with most Buy American rules, was to pressure automakers to relocate auto manufacturing to the United States and open state-of-the-art electric vehicle factories.
This provision, however, was amended to ensure that electric vehicles manufactured in Mexico and Canada can also benefit from the tax credits. The Canadian government claimed victory with the change, noting that the credits will be a boost for their industry:
“It took Team Canada defense to get us 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 consistently emphasized that the original proposal would be detrimental to both Canada and the United States, 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 that the original version would roll back decades of integration in the North American auto sector. The Mexican government also criticized the initial proposal, calling it self-defeating for the United States.. [Emphasis added]
Now, Democrats are looking to go even further in terms of profits for US jobs contracting companies. Automakers producing in China are pushing to remove provisions that prevent the use of tax credits on electric vehicles made with Chinese batteries.
Sen. Debbie Stabenow (D-MI) wants the legislation to subsidize companies that source electric vehicle batteries from China, Russia and other foreign countries with strained relations with the United States.
“Unfortunately after [the tax credits are] implemented…at this point it looks like companies won’t be able to use them,” Stabenow said.
John Binder is a reporter for Breitbart News. Email him at firstname.lastname@example.org. Follow him on Twitter here.