The Ford government is reaching out to top American politicians in the hopes of thwarting the latest protectionist measure coming from Washington.
A proposed tax rebate on electric cars currently before the U.S. Congress could have a devastating impact on the future of Ontario’s auto industry.
The rebate, part of the Build Back Better budget bill, would offer American consumers a rebate of up to $12,500 for purchasing an electric vehicle but only if the car is assembled in the United States with 50% American parts and an American made battery. If passed, auto industry experts say the rebate could kill future investment in Ontario’s auto plants and hurt existing jobs.
A letter from Economic Development Minister Vic Fedeli was sent to top Democrats Chuck Schumer and Nancy Pelosi as well as their Republican counterparts Mitch McConnell and Kevin McCarthy.
“Our government is concerned that the U.S. Congress’ approach to EV tax credits could prevent U.S. and Canadian businesses in the auto sector from leveraging the strong cross border supply chains they have built over decades,” Fedeli wrote while reminding his political counterparts their proposal could hurt American as well as Canadian workers.
Fedeli also pointed out Ontario would be America’s third largest trading partner if it were a separate country and that the province is already the number one trading partner for 19 states.
“Ensuring strong trade ties is vital to businesses and communities on both sides of the border that rely on these trade relationships, particularly as our economies continue to recover from the COVID-19 pandemic,” Fedeli wrote.
The letter spelled out that the proposed protectionist tax rebates would likely be in violation of World Trade Organization rules and the renegotiated NAFTA deal.
Fedeli said that if required, Ontario would support challenging the tax incentive but called on the American authorities to work on a proposal for the entire auto industry.
“In order to prevent the disruption of Ontario-U.S. supply chains and ensure North American made vehicles remain viable and competitive globally, we are advocating for a joint North American approach to our auto sector’s transition to EVs,” Fedeli wrote.
The Ford government has been determined to turn around Ontario’s auto industry and secure new assembly plants, new parts plants and specifically an electric vehicle battery plant. Stellantis, formerly Chrysler, is looking at where to locate their North American EV battery plants and Ontario is on the short list.
If this tax proposal is passed, it would offer manufacturers a significant incentive to locate stateside and potentially shut Ontario out of the auto industry’s electric future.