Sunday, March 3, 2024

“Electric car subsidies are a reminder that the return of American protectionism is now a bipartisan reality.”

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Maria Gill
Maria Gill
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losses and profits. Those who thought US trade policy would be nicer under Joe Biden than with Donald Trump are at their expense. Only the most polished style has changed. For the rest, it is sometimes worse. This is what Canada and Mexico are watching bitterly, both specific victims of their big neighbor’s protectionist impulses. The last episode of electric car support. In the massive investment program of 1.7 billion dollars (1.5 billion euros), which has already been voted on by the House of Representatives but not by the Senate, large subsidies are planned for the purchase of bicycles or electric cars. In the latter case, the support can be as high as $12,500 per vehicle.

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But this great help is not for everyone. Added to the base is $7,500 if the vehicle is produced in the United States and another $500 if the battery itself is “Made in the USA”. Mary Ng, Canada’s Minister of Foreign Trade, took out the calculator and said this amounts to taxing a car produced in Canada and sold in the United States at 34%. Under these circumstances, it was not worth signing, in 2018, under the Trump administration, a new free trade agreement, which entered into force in 2020.

Toyota, BMW and Mercedes protests

Moreover, as if to distance itself from the previous administration and appease its left wing, Biden’s plan includes an even more surprising paragraph. It limits the $4,500 “Made in the USA” subsidy to cars produced by union workers only. This de facto excludes foreign cars, German, Japanese or South Korean, all made in the southern states, without unions: Virginia, Alabama, Indiana … For decades, these conservative states have welcomed foreign manufacturers by leaving them to the door is the bad unions that make car manufacturing Expensive in Michigan, the historic headquarters of Ford and General Motors. Toyota, BMW, and Mercedes immediately protested this innovation that would potentially reduce their competitiveness.

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Of course, the Biden administration replies that it is natural for American taxpayer money to finance American factories, and that, for the benefit of unions, it also helps rebuild the middle class so dear to the heart of the American president. This sudden activity reminds us that the return of American protectionism is now a bipartisan reality. As for the evolving structure of this scholarship on multiple terms, because of the desire to please everyone, on the right as on the left, it is likely that it will not please anyone.

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