Arizona auto aspirations make unlikely ally in fight against electric vehicle tax credit in Canada

WASHINGTON – From its arid desert climate to its mercurial center-right politics, the southern border state of Arizona seems to have little in common with Canada beyond the wary snowbirds in the winter.

WASHINGTON – From its arid desert climate to its mercurial center-right politics, the southern border state of Arizona seems to have little in common with Canada beyond the wary snowbirds in the winter.

But President Joe Biden’s controversial plan to use protectionist tax incentives to promote US-made electric vehicles, which threatens the misery of the Canadian auto industry, creates all kinds of strange bedfellows.

With its proximity to both Silicon Valley and the US-Mexico border, without the high taxes and regulations of neighboring California, Grand Canyon State is working to accommodate the impending electric vehicle revolution – a vision set endangered by Biden’s project.

“We’re going to be one of the next hubs in the United States for manufacturing next-generation electric vehicles,” said Chris Camacho, president and CEO of the Greater Phoenix Economic Council.

“We just want, from a federal policy perspective, a fair and balanced approach so that consumers can buy the products they want. Whether they are produced in states like Arizona or other states across the country, we believe that prudent behavior should be done fairly.

Arizona is far from the only state opposed to the measure, which, if passed, would allow potential buyers of electric vehicles to benefit from tax credits worth up to $ 12,500 provided whether their favorite car or truck is assembled in the United States and built with unionized workers.

But few have been more vocal critics. Last month, Phoenix Chamber of Commerce CEO Todd Sanders and Jaime Molera, Arizona director of a conservative environmental group called The Western Way, wrote an opinion piece denouncing a “poorly worded” draft that “Hamper” the state’s ambitions for electric vehicles.

Sanders, for his part, takes little comfort that Biden’s Build Back Better Bill, the $ 1.75 trillion social and climate spending program that contains the tax credits, suffered a setback before Christmas. when renegade Democratic Senator Joe Manchin said he wouldn’t. support it.

“What you learn early on is that nothing is ever dead,” Sanders, himself a veteran of public policy debates in government at the state legislature level, said in an interview. .

“If we can involve Canada in this project, obviously our friends in Mexico and then our delegation to Congress, it at least begins to raise concerns that this is not necessarily the right way to go.”

In addition to promising EV players like Rivian, Nikola and ElectraMecchanica, Arizona is also attracting suppliers of parts and manufacturing services, including Jomi Engineering Group, based in Barrie, Ont., Which will have approximately 120 employees by mid -year. its new facility at Casa Grande, just south of Phoenix.

“You can’t fight it,” Jomi founder and president Michael Hoy said of the electric vehicle industry’s growing gravitational pull to the southern United States.

“(We) could no longer build the Canadian operation; we probably would never have had the opportunity like we do, or become competitive enough, if we didn’t get closer to our customers. “

In October, Arizona Gov. 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 punishing auto workers and automakers because workers in their factories have chosen not to unionize,” the letter said.

“Congress should not pass proposals that favor vehicles produced by one workforce over another, especially when doing so significantly limits consumer choice and undermines broader carbon reduction targets. ”

In the 50-50 Senate, West Virginia Manchin was the subject of speculation about his support for Build Back Better. Less attention has been paid to an equally unpredictable Democratic colleague, Senator Krysten Sinema, whose moderate-conservative politics aptly sums up the purple state she represents: Arizona.

As a right-to-work state – by law, potential employees cannot be compelled to join a union – with a vested interest in a robust and growing EV industry, Arizona is uniquely focused on eliminating the $ 4,500 portion of tax credits that focus on vehicles assembled in the United States and built by unions.

“That should make him almost the optimal ally,” said Roy Norton, a former senior diplomat who spent two stays at the Canadian Embassy in the 1990s and 2000s before becoming a diplomat in residence at the Balsillie School of International. Affairs in Waterloo, Ontario. .

“We don’t want to kill the subsidies. We just want to remove the subsidies for vehicles made in the United States exclusively, and Arizona should be on precisely the same wavelength as long as this is a State of the right to work which is at odds with a president and an administration which is a bit of a step backwards. “

Officials in Ottawa confirm that the Arizona congressional delegation, and Sinema’s office in particular, continue to be at the center of the federal government’s lobbying efforts, which culminated late last year with the visits to Washington by several emissaries, including Prime Minister Justin Trudeau.

Biden, however, does not hide his affinity for unionized workers, nor his ultimate goal of restoring the former luster of the once powerful American manufacturing sector. Both, along with reducing carbon emissions, are the main goals of a tax credit program that the White House says is close to its heart.

While he didn’t specifically mention the electric vehicle tax credits, Biden himself strongly signaled on Friday that he had not abandoned the Build Back Better bill, which is expected to come back to the fore. in the weeks or months to come.

Whether it will continue to include tax credits or whether the VE’s vision emerges in a different form remains an open question.

Responding to the latest US jobs report, the president on Friday reiterated his vision of a resurgent US manufacturing sector, fueled by an economy growing “from the bottom up and through the middle.”

“From day one my economic agenda has been different. It is about taking a fundamentally new approach to our economy – one that sees the prosperity of working families as the solution, not the problem,” he said. -he declares.

“Let’s do what we sell in America made in America, so we don’t risk foreign supply chains and shipping delays.”

This report by The Canadian Press was first published on January 9, 2022.

James McCarten, The Canadian Press