With cross-border auto tensions now within the rear-view mirror, Prime Minister Justin Trudeau is speaking about Canada’s subsequent large bilateral problem: head-to-head financial competitors with the US.
From a Canadian perspective, the primary two years of President Joe Biden’s time period have been all about countering a persistent bout of U.S. protectionism by preaching the virtues of commerce between like-minded companions.
One thing sank in. Biden’s panic-inducing plan to energise electric-vehicle gross sales introduced Canada and Mexico into the tent on the eleventh hour. And Treasury Secretary Janet Yellen even coined a brand new time period — “friend-shoring” — to placate America’s anxious allies.
However to listen to Trudeau inform it, none of meaning Canada is about to tug its punches within the coming battle for sustainable development, higher-paying jobs, overseas funding and worldwide expertise.
“Competitiveness with the U.S. has at all times been a problem for us — it was a problem below Trump, it was a problem below each earlier administration,” he stated in a year-end interview with The Canadian Press.
‘EXTREMELY ATTRACTIVE PLACE TO INVEST’
“We’ll at all times determine methods to ensure that the Canadian benefits” — loads of room for development, he stated, together with a dependable, numerous and well-educated workforce that comes with built-in well being care — make Canada “an especially enticing place to take a position.”
Trudeau talked about two particular examples.
Metal big ArcelorMittal Dofasco is changing its plant in Hamilton to make it much less carbon-intensive, utilizing electrical arc furnaces as an alternative of coal-burning blast furnaces to slash annual carbon emissions by as a lot as 60 per cent.
The venture, funded partially by the federal and Ontario governments, will make it the primary main steelmaking facility in North America to make the swap, approaching line within the subsequent 4 years.
And GM Canada introduced final month that its meeting facility in Ingersoll, Ont., would turn into the nation’s first to supply nothing however electrical autos, with a goal of fifty,000 vans and vans a yr by 2025.
“We did not beg them for that,” Trudeau stated. “They only realized, ‘Oh, the market’s there, and the standard is there, the Canadian employees are delivered — we will be extra bold.”‘
Simply because two nations are allies doesn’t suggest they cannot even be financial rivals, stated Michael Harvey, vice-president, coverage and worldwide with the Canadian Chamber of Commerce.
CANADA NEEDS TO COMPETE
“We each co-operate with the US, our closest ally, and we compete within the financial area. So we do each,” Harvey stated. “It is in Canada’s curiosity to co-operate as a lot as we will, however the place we have to compete, we achieve this.”
That features the Inflation Discount Act, the marquee local weather, tax and health-care package deal that deserted Biden’s unique Purchase American EV tax credit in favour of incentives that included Canadian-made autos.
As a lot as Biden’s signature on that invoice was a keep of execution for Canada’s auto sector and a boon to an rising essential minerals business, it was additionally a stark declaration of U.S. ambitions, Harvey added.
“In case you take a look at the Inflation Discount Act, what you’ve got obtained is a significant industrial coverage spend. That implies that Canada must step up and be capable to compete with that, or else we will get left behind.”
Crucial minerals, the battery building-blocks so integral to Twenty first-century transportation and know-how, are central to that effort.
CANADA MOVING UP
Canada jumped three spots to second place in BloombergNEF’s annual rating of gamers within the world lithium-ion battery provide chain, due to a wholesome provide, rising North American demand and sturdy upstream clear vitality.
The federal authorities has dedicated $3.8 billion this yr alone to foster mining and processing efforts, in addition to part manufacturing and EV manufacturing. Chrysler father or mother Stellantis has partnered with LG on a $4-billion EV plant in Windsor, whereas Volkswagen and Tesla are additionally kicking Canada’s tires.
The nation ranks second solely to China, the world chief in battery metals refining, which is house to 75 per cent of all battery manufacturing capability worldwide, in addition to just about all of planet’s anode and electrolyte manufacturing.
The U.S. stays third, BloombergNEF stated in its November report, partially as a result of “it would nonetheless be reliant on uncooked materials imports for batteries, particularly from its free-trade companions.”
That features Canada, though the U.S. would not have a tendency to say it by identify.
“Buddy-shoring is a rebuttal to those that argue that financial safety will be achieved solely via protectionism,” Yellen wrote in a Challenge Syndicate essay final week.
“We do not search to supply all the pieces ourselves. Nor can we search to restrict commerce to a small group of nations. That will considerably hurt the effectivity good points of commerce and harm U.S. competitiveness and innovation.”
To make sure Canada stays each a valued ally to the U.S. and in the identical weight class, it must deal with “trade-enhancing infrastructure,” together with expanded port services, to maintain provide chains robust, in addition to making certain extra Canadians can participate within the labour drive, Harvey stated.
“Being proper subsequent to the US, an important financial system on the planet, is at all times going to be one in all Canada’s biggest financial benefits,” he stated.
“We have to make these investments in issues that may actually beef up our commerce.”