After a marathon vote that lasted nearly 24 hours, the US Senate finally approved the new 2022 Inflation Reduction Act. US Vice President Kamala Harris had to break a 50-50 tie to pass the legislation, a dramatically smaller version of President Joe Biden’s $2 trillion package of US climate and social spending. The original proposal provided the richest tax breaks for vehicles assembled in the U.S. with unionized labor — a plan experts say would have brought Canada’s auto industry to its knees. But Senate Majority Leader Chuck Schumer reached a deal with West Virginia Sen. Joe Manchin on a version of the bill that extended the credits to vehicles made in Canada and Mexico. The bill is expected to win approval in the Democratic-controlled House of Representatives next week before going to the president’s desk. “It’s been a long, hard and winding road, but we’re finally, finally here,” Schumer said Sunday, when the outcome was no longer in doubt. “I am confident that the Inflation Reduction Act will stand as one of the defining pieces of legislation of the 21st century.” West Virginia Democratic Sen. Joe Manchin has struck a deal with Senate Majority Leader Chuck Schumer to advance climate change and health care legislation. (Jose Luis Magana/The Associated Press) The bill dedicates $369 billion to measures to combat climate change, while also curbing drug costs for seniors, expanding health insurance benefits and reducing the deficit. The climate measures also include incentives to build clean energy equipment such as solar panels and wind turbines, reduce pollution levels in minority communities and expand greener factory-farm operations. Republicans, whose barrage of proposed amendments were shot down Saturday night and Sunday, framed their defeat as a victory for higher taxes, more inflation and continued reliance on foreign energy. “Democrats have already robbed American families once through inflation,” said Senate Minority Leader Mitch McConnell. “Now their solution is to rob American families a second time.” The tax credits — which also require eligible vehicles to have a percentage of critical North American minerals in their batteries — were hardly part of the conversation in the US. Critics say it will be years before consumers benefit.
Critical victory for the Canadian car industry
But for the Canadian automaker, the stakes were huge. Flavio Volpe, president of the Auto Parts Manufacturers Association, was just one part of a year-long effort by the industry, the Ontario government and Ottawa to convince US lawmakers and Biden administration officials to step down. “It’s a cigar. It’s always a cigar,” Volpe said when asked how he would mark the occasion. “In trade wars, by the time it’s officially over, everyone else has moved on to the next issue of the day. I’ve had so many quiet cigars that it’s become my ritual.” WATCHES | Prime Minister Trudeau Announces EV Battery Deal in July:
Trudeau announces deal with Umicore to build EV battery factory in Ontario
Prime Minister Justin Trudeau was in Kingston, Ont. to announce a $1.5 billion deal to build an electric vehicle battery plant in Loyalist Townships, Ontario. Manchin, a surprise Senate vote from a state where Toyota is a major manufacturer, has long opposed the idea of leaving foreign automakers out of EV incentives — but it was unclear until last week whether that would pay dividends for him. Canada. The surprise deal he struck with Schumer marked the culmination of an aggressive lobbying effort that began with Prime Minister Justin Trudeau’s visit to the White House in November. Federal government officials say it was rivaled in scope only by the 2017-18 NAFTA talks, the high-stakes Trump-era negotiations that forged the zone-flooding diplomatic strategy now known as the “Team Canada” approach. It targeted a wide range of US officials and lawmakers and included at least one face-to-face meeting in recent months between Manchin and Deputy Prime Minister Chrystia Freeland.
