Canada may have another unlikely ally in its electric vehicle tax-credit fight: Arizona

From its dry desert climate to its mercurial politics and center-right, southern border state Arizona seems to have little in common with Canada beyond winter snowbirds.

But US President Joe Biden’s controversial plan to use protectionist tax incentives to promote American-made electric cars, which threatens misery for the Canadian auto sector, is making all kinds of weird companions.

With its proximity to Silicon Valley and the US-Mexico border — without the high taxes and regulation of its tech-savvy neighbor California — the Grand Canyon state is scrambling to host the looming electric car revolution — a vision jeopardized by the Biden scheme.

“We will be one of the next hubs in the United States to manufacture the next generation of electric vehicles,” said Chris Camacho, president and CEO of the Greater Phoenix Economic Council.

“We just want, from a federal policy point of view, a fair and balanced approach so consumers can buy the products they want. Whether they’re produced in states like Arizona or other states across the country, we believe a prudent policy to induce consumer behavior should be done fairly” .

Arizona isn’t the only state opposed to the measure, which, if passed, would allow potential electric car buyers to enjoy tax breaks of up to $12,500, provided their favorite car or truck is assembled in the United States and built with a labor union.

But few were more outspoken than the critics. Last month, Greater Phoenix Chamber of Commerce CEO Todd Sanders and Jaime Molira, Arizona director of a conservative environmental group called The Western Way, wrote an op-ed condemning a “poorly crafted” plan that would “hinder” the state’s electric vehicle ambitions.

The bill suffered a setback in December

Sanders takes little comfort in the fact that Biden’s Building Back Better bill, the $1.75 trillion US social spending and climate package that contains tax credits, suffered a setback before Christmas when renegade Democratic Senator Joe Manchin announced that he would not supports it.

“What I learned early on is that absolutely nothing has died,” Sanders, himself a veteran of public policy debates within the government at the state level, said in an interview.

“If we can bring Canada into this, obviously our friends from Mexico and then our delegation in Congress, that at least starts to make us fear that this isn’t necessarily the right way to go.”

Along with emerging electric vehicle players like Rivian, Nikola Corp and ElectraMeccanica, Arizona is also attracting parts and manufacturing service suppliers — including Jomi Engineering Group, headquartered in Barry, Ont., which by mid-year will have some 120 employees at its new facility. In Casa Grande, south of Phoenix.

You can’t fight it, said Michael Howe, founder and president of Jomi, about the growing attractiveness of the electric vehicle sector toward the southern United States.

“[We] The Canadian operation cannot be built anymore; We may never have had the opportunity as well as we do, or we would not have had enough competition, if we had not gotten closer to our customers.”

US Senator Joe Manchin, a Democrat from West Virginia and a critical voter in the Senate, said he does not support the current version of the $1.75 trillion Building Back Better US legislation. (Stephanie Reynolds/The New York Times/Associated Press)

In October, Arizona Governor Doug Ducey was among 11 Republican state governors who wrote to congressional leaders denouncing Biden’s plan as an unfair use of taxpayer money.

“We cannot support any proposal that creates a discriminatory environment in our states by penalizing auto workers and car companies because workers in their factories have chosen not to join unions,” the letter read.

“Congress should not enact proposals that favor vehicles produced by one workforce over another, particularly when doing so would significantly limit consumer choice and undermine larger carbon emissions reduction goals.”

Arizona delegation is a pressure target for Canada

In the US Senate from 50 to 50 years old, West Virginia’s Manchin has been the focus of will-won’t-speculation about his support for Build Better.

Less attention has been paid to an equally unpredictable fellow Democrat, Senator Kirsten Senema, whose moderate conservative politics sums up well the purple state she represents: Arizona.

As a state with the right to operate—by law, potential employees are not required to join a union—with a vested interest in a strong and growing EV industry, Arizona is focused solely on eliminating the $4,500 portion of tax credits focused on U.S. assembled vehicles and unions.

That should make them almost the perfect ally,” said Roy Norton, a former senior diplomat who spent two stints at the Canadian Embassy in the 1990s and 2000s, before becoming a resident diplomat at the Balsley School of International Affairs in Waterloo, Ontario. .

“We don’t want to eliminate subsidies. We just want to eliminate subsidies for exclusively American-made vehicles — and Arizona specifically has to be on the same page because it’s a right-to-work status that conflicts with a president and administration that’s kind of a throwback.”

Officials in Ottawa stress that Arizona’s congressional delegation – and the Cinema Office in particular – remain the focus of the federal government’s lobbying effort, which culminated late last year with visits to Washington by several envoys, including Prime Minister Justin Trudeau.

Canada’s International Trade Minister Mary Ng, left, and Deputy Prime Minister Chrystia Freeland write to senior US senators threatening retaliation if the electric vehicle tax credit is approved. (Cole Burston/The Canadian Press)

However, Biden makes no secret of his affinity for blue-collar union workers, nor of his ultimate goal of restoring the former luster of America’s once mighty manufacturing sector. Both, along with reducing carbon emissions, are the main goals of a tax credit plan that the White House says is close to its heart.

Although he did not specifically mention tax credits for electric vehicles, Biden himself strongly indicated on Friday that he has not abandoned the Build Better bill, which is likely to come back to the fore at some point in the coming weeks or months.

Whether it will continue to include tax credits, or see the EV emerge in a different form, remains an open question.

In response to the latest US jobs report, the president on Friday reiterated his vision of a renewed US manufacturing sector, powered by an economy growing “from the bottom up and the middle out.”

“From day one, my economic agenda has been different,” Biden said. “It’s about taking a fundamentally new approach to our economy — one that sees thriving working families as a solution, not a problem.”

“Let’s make what we sell in America in America, so we are not at risk from foreign supply chains and shipping delays.”

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