Justin Trudeau’s trade chief signaled Canada is willing to step up its fight against the Biden administration’s proposed Buy American tax incentives for electric vehicles after meetings with lawmakers from both parties on Capitol Hill.

The Trudeau government is now girding for a drawn out campaign to make its case that the tax credits, included in the US$1.75 trillion Build Back Better Act, violate the newly overhauled North American free-trade agreement, Trade Minister Mary Ng said Friday in a phone interview. 

“There is more work to be done. We’re not going to get to a solution overnight,” she said after two days of meetings in Washington, where she was accompanied by lawmakers from opposition Canadian parties and auto industry leaders. 

While Ng described her talks as “productive,” she added that “some of the senators that I met with had only heard of this for the first time.”

Her comments come a day after Mexico’s economy minister threatened to retaliate if the EV issue isn’t resolved. Asked if Canada is compiling a list of U.S. goods that could be targeted as a retaliatory measure, Ng declined to comment but added her government “will respond accordingly” if required.

“We stand up for jobs, we stand up for Canadian workers, we stand up for Canadian businesses,” she said “And what we’re talking about here are hundreds of thousands of jobs that could be impacted.”

The trip marked a return visit to Washington for Ng, who accompanied the prime minister to a White House summit with U.S. President Joe Biden and Andres Manuel Lopez Obrador of Mexico. Trudeau failed to secure a compromise on the EV issue at the Sept. 18 meeting.

BILATERAL IRRITANTS

Canada had hoped Biden would prove a more reliable partner than his Republican predecessor. But since taking office the president has scrapped a major cross-border crude oil pipeline and is awaiting an Army Corps of Engineers review of another conduit under the Great Lakes that’s opposed by Michigan’s governor.

The EV issue is Canada’s top priority, as Build Back Better heads for a vote in the U.S. Senate as early as this month. 

Canada’s auto industry has sounded the alarm on Biden’s proposal, which would offer buyers of vehicles made by unionized U.S. workers an additional US$4,500 in credits above the US$7,500 available for those produced by all manufacturers. Stakeholders call it “a discriminatory tariff” that they fear will entice manufacturers to invest in the U.S. rather than other parts of the integrated North American market. 

Ng also raised a separate issue around the interpretation of auto content rules under the new Nafta. Consultations on the rules between the three countries failed to produce a resolution, and both Canada and Mexico are considering requesting an arbitration panel under the trade deal.

There are also cross-border tensions in the lumber trade, with the U.S. doubling duties for Canadian softwood producers last week. The two countries are even at odds over potatoes, after a fungal disease halted shipments of the crop from the Atlantic province of Prince Edward Island. 

Ng raised the latter issue in a meeting with Jenniffer Gonzalez, Republican representative in the House for Puerto Rico, a major purchaser of PEI spuds.

Calling the softwood tariffs “unjustified,” Ng said she found common cause in a meeting with U.S. home builders. 

“They absolutely share our deep concern,” she said. “The tariffs hurt housing affordability, they stunt economic growth, they undermine the efforts to a sustainable recovery from this pandemic.”