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

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

With its proximity to both Silicon Valley and the US-Mexico border – minus the high taxes and regulations of the tech-savvy neighbor of California – Grand Canyon State is striving to accommodate the impending electric vehicle revolution – a vision endangered by Biden’s project.

“We are 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 of up to US $ 12,500, provided that their favorite car or truck be assembled in the United States and built with unions.

But few have been more vocal critics. Grand 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 last month denouncing a “poorly worded” bill. which would “hamper” the State’s ambitions in terms of electric vehicles.

Bill hit by setback in December

Sanders takes little reassurance that Biden’s Build Back Better bill, the US $ 1.75 trillion social and climate spending program that contains tax credits, suffered a setback before Christmas when the Democratic senator renegade Joe Manchin has said he will not support him.

“What you learn early on is that nothing is ever dead,” Sanders, himself a veteran of public policy debates in state-level government, 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 electric vehicle players such as Rivian, Nikola Corp. and ElectraMeccanica, Arizona is also attracting suppliers of parts and manufacturing services, including Jomi Engineering Group, based in Barrie, Ont., which by mid-year will have some 120 employees at its new facility. from 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. “

Arizona delegation a lobby target for Canada

In the 50-50 US 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 Kyrsten Sinema, whose moderate-conservative politics aptly sums up the purple state it 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 remove 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 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 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 vision of the VE 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,” Biden said. .

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