Losses and profits. Those who thought that American trade policy would be gentler under Joe Biden than with Donald Trump are at their cost. Only the more polished style has changed. For the rest, it is sometimes worse. This is what Canada and Mexico are bitterly observing, both designated victims of the protectionist impulses of their big neighbor. Last episode, subsidies for the electric car. In the gigantic investment program of 1.7 billion dollars (1.5 billion euros), already voted by the House of Representatives but not by the Senate, large subsidies for the purchase of bicycles or electric cars are planned. In the latter case, the subsidy can reach $ 12,500 per vehicle.
But this spectacular aid is not for everyone. To the base $ 7,500 is added $ 4,500 if the car is produced in the United States and another $ 500 if the battery itself is “made in the USA”. Mary Ng, the Canadian Minister of Foreign Trade, took out her calculator and said that this amounts to taxing a car produced in Canada and sold in the United States at 34%. Under these conditions, it was not worth signing, in 2018, under the Trump administration, a new free trade agreement, which entered into force in 2020.
Toyota, BMW and Mercedes protest
Moreover, as if to set itself apart from the previous administration and satisfy its left wing, the Biden plan includes an even more astonishing clause. It restricts the “made in USA” subsidy of $ 4,500 to only cars produced by unionized workers. This excludes de facto foreign cars, German, Japanese or South Korean, all manufactured in southern states, without unions: Virginia, Alabama, Indiana … For decades, these conservative countries have welcomed foreign manufacturers by leaving to the door is the nasty unions that make cars so expensive to manufacture in Michigan, the historic headquarters of Ford and General Motors. Toyota, BMW and Mercedes immediately protested against this innovation likely to reduce their competitiveness.
Of course, the Biden administration responds that it is normal for the American taxpayer’s money to finance American factories and that, favoring the unions, it is also helping to rebuild the middle class dear to the heart of the American president. This sudden activism reminds us that the return of American protectionism is now a bipartisan reality. As for the sophisticated architecture of this grant with multiple conditions, by dint of wanting to satisfy everyone, on the right as on the left, it is likely to not please anyone.