After talks in D.C., Trudeau says he's still concerned about threats to Canada's auto sector

Prime Minister Justin Trudeau said Thursday he pressed his U.S. counterpart to drop a provision of the pending $1.9-trillion social infrastructure bill which has the potential to devastate the Canadian auto sector.

"We're concerned," Trudeau said in French at a news conference after the North American Leaders' Summit. "This would be quite a problem for vehicle production in Canada. We stressed this with the Americans throughout our conversations. They've heard us loud and clear."

At issue is a clause buried in the Build Back Better Act, President Joe Biden's plan to inject hundreds of billions of dollars into social programs and climate initiatives to help juice the country's COVID-19 recovery.

To spur the fledgling electric vehicle (EV) industry, the Democratic-controlled Congress is proposing sizeable tax credits worth up to $12,500 US to buyers of new electric vehicles — as long as those cars are manufactured by union workers in the U.S.

Experts agree the tax measure would be a major blow to the Canadian automotive sector, which is trying to attract new investment as the industry transitions away from internal combustion engines. The fear is that manufacturers would shift production from Canada to the U.S. to make cars that qualify for the generous subsidy.

The program would privilege cars made in so-called "blue" states where unionized factories prevail, to the detriment of Ontario plants like GM's Oshawa assembly, Ford's factory in Oakville or the sprawling Chrysler operation in Windsor. It would also hit U.S. car factories in "right-to-work" states where the United Auto Workers (UAW) union is a non-factor.

Trudeau vowed to continue the conversation with Biden and American lawmakers and to stress that U.S. EV production depends on critical minerals that Canada has in abundance, like cobalt, nickle and lithium.

Biden was non-committal when asked if his administration would exempt Canada from such a tax plan, given that the North American auto industry is so deeply intertwined.

"We're going to talk about that. It hasn't even passed yet through the House … and we don't know what will happen in the Senate. There's a lot of complicating factors," he said. The bill was expected to pass, with the tax credit intact, late Thursday.

Michigan Republican Rep. Bill Huizenga — who says he stands with Canada on the EV tax credit — met with Trudeau Wednesday, as part of a bipartisan group of lawmakers which included U.S. House Speaker Nancy Pelosi.

He said some were "surprised" by Trudeau's "forceful" reaction to the issue.

"This really was the thing that dominated the conversation and the prime minister really stressed the point," Huizenga told CBC's Power & Politics. 

"I think it caught them a little flat-footed, to be honest." 

WATCH | Canada pushes back on 'Buy American':