John Irwin, Automotive News Canada
November 27th, 2020
Joe Biden as the next president of the United States will have far-reaching implications for the Canadian auto industry on everything from trade and tariffs to emissions and electric-vehicle adoption.
The next four years are expected to be vastly different from the previous term under U.S. President Donald Trump, who has pursued protectionist trade policies and rolled back vehicle-emissions standards.
How much sway Biden, the 46th president, will have over U.S. policy will likely come down to two Senate races in January that will determine which party controls the upper house of Congress. Regardless of how the races play out, here are three key areas in which policy could shift, and how they might affect Canada:
TRADE AND TARIFFS
Biden has said he supports the new United States-Mexico-Canada Agreement, which took effect this year and replaced the North American Free Trade Agreement. Biden voted for NAFTA as a senator.
For an industry adjusting to new rules and looking for consistency in North American trade policy, this will likely come as good news.
Still, Biden has signaled he will not be a free-trade absolutist. According to his campaign website, the president-elect would pursue a “national commitment to Buy American.” And in 2019, he said he would renegotiate the Trans-Pacific Partnership before committing the United States to rejoining the pact, which Trump pulled the country out of in 2017.
But Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said the industry is hopeful that a Biden administration would be less inclined to issue tariffs on Canadian aluminum, as the United States has done twice under Trump.
“Anything that removes … monthly tariff threats from the equation is good for business,” Volpe said.
EMISSIONS, FUEL ECONOMY STANDARDS
The Trump administration this year rolled back U.S. fuel-economy standards, which now require 1.5-percent annual increases in fuel efficiency through 2026. That’s far weaker than the five-per-cent increases required under standards previously set by the Obama administration, for which Biden served as vice-president.
Standards could soon rise, however. In his platform, Biden vowed to develop “a new fuel-economy standard that goes beyond” those set by the Obama administration, which targeted average fuel economy of 54.5 mpg (4.3 l/100 km) for new cars and light trucks sold in the 2025 model year.
That could mean Canada will not break away from U.S. fuel-economy standards to set its own or join standards set by California or other states. The Trump administration’s fuel-economy rollback pressured the federal government to do just that in order to meet its climate targets, even as many in the auto industry have warned of the risks of not having harmonious fuel-economy regulations between both countries.
Stronger fuel-economy standards could spur more rapid electric-vehicle adoption than under weaker rules, though many hurdles remain in a market still dominated by pickups and SUVs. The Biden campaign has pledged to deploy more than 500,000 public charging outlets in the United States by 2030 and said it would restore a federal tax credit to provide incentives to EV purchases.
Greater EV adoption in the United States would likely be good news for Ford Motor Co.’s Oakville, Ont., assembly plant as well as Fiat Chrysler Automobiles’ Windsor, Ont., factory, both of which are slated to receive major investments in the coming years for green-vehicle production. Most Canadian auto production is exported, and the United States remains a massive auto market. Stronger demand there could mean more work for Oakville and Windsor.
Read the full article here.