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Biden's inflation bill is 'big win' for Canada after Canadian lobbying results in benefits for Canada — and PM Trudeau is celebrating

DAVE CHAN/AFP via Getty Images

Canadian Prime Minister Justin Trudeau celebrated President Joe Biden signing into law the Inflation Reduction Act on Tuesday.

The celebration, however, was more than a simple gesture of goodwill among close allies. In fact, Trudeau has good reason to celebrate: The bill benefits Canadian companies.

What did Trudeau say?

In a tweet celebrating the new law, Trudeau said the Inflation Reduction Act is "good news for Canadians" — and the country's "growing EV manufacturing sector."

"It’s official: @POTUS signed legislation that will include Canada in a new tax incentive for electric vehicles purchased in the US. This is good news for Canadians, for our green economy, and for our growing EV manufacturing sector," the Canadian premier said Tuesday afternoon.

How does the law benefit Canada?

Specifically, the law will boost Canada's electric vehicle manufacturing industry because the tax credits it provides to Americans are not limited to American-made products.

In fact, the bill initially limited tax credits to American-made products, but "aggressive" Canadian lobbying resulted in a language change that benefits Canada.

The Financial Post, a Canadian news outlet, explained:

Initially, the language of the bill was framed in a way that would have favoured American automotive production over imports from Canada and other countries. For Canada, the main issue was the bill’s plan to attach generous tax credits to the purchase of American-made electric vehicles, which Canadian politicians said would violate the North American trade agreement.

Following months of aggressive lobbying from Canada, Democratic lawmakers brought in key changes, including a US$3,750 credit for vehicles whose batteries contain critical minerals extracted or processed in a country with which the U.S. has a free-trade agreement or were recycled from depleted batteries at a facility in North America.

Canadian economist Patricia Mohr described the language changes as a "big win" for Canada, the Financial Post reported.

Not only will the law benefit Canada's critical minerals industry in the long term, Eric Desaulniers, president and CEO of a Quebec-based mining company, told the Financial Post the law puts Canadian manufactures in a "privileged" position.

The benefits for Canada, though under-reported in the U.S., were not lost on every lawmaker.

"Using your taxes to boost the Canadian automobile manufacturing sector is not going to reduce inflation in the United States, but it is quite a gift to Canada, the same country that sued the US in the WTO to get us to remove country of origin labels from our beef and pork," Rep. Thomas Massie (R-Ky.) said Tuesday.

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