Biden has pledged tax credits for electric vehicles. Here’s what that means for Canada

The "made in America" mantra that has been sending chills up Canadian spines was a fixture of U.S. President Joe Biden's first State of the Union address Tuesday.

Despite the protectionist drumbeat that provided the rhythm of Joe Biden‘s first state of the union speech, it was what the U.S. president didn’t say Tuesday about electric vehicles that has some in Canada breathing a little more easily.

Make no mistake, the “made in America” mantra — a calling card for the commander-in-chief that has been sending chills up Canadian spines ever since he moved into the White House last January — was a fixture of the hour-long speech.

“One way to fight inflation is to drive down wages and make Americans poorer. I have a better plan to fight inflation — lower your costs, not your wages,” Biden said, an appeal to moderate Democrats who fear the risk of higher prices from government spending.

“Make more cars and semiconductors in America. More infrastructure and innovation in America. More goods moving faster and cheaper in America … And instead of relying on foreign supply chains, let’s make it in America.”

But the political language seemed to give way to pragmatism when Biden briefly reprised the idea of using tax credits to get Americans to buy more EVs, a strategy whose original form placed the richest incentives on vehicles assembled in the U.S. with union labour.

“Let’s provide investments and tax credits to … lower the price of electric vehicles, saving you another $80 a month because you’ll never have to pay at the gas pump again.”

Foreign automakers, as well as non-unionized U.S. EV giant Tesla, were harsh critics of Biden’s original plan, one small component of an ill-fated $2-trillion suite of social spending and climate programs known as the Build Back Better bill.

So too were moderate Democrat lawmakers like West Virginia Sen. Joe Manchin, whose state is a major manufacturing sector for Toyota, and Sen. Kyrsten Sinema from Arizona, a southern border state with expansive ambitions in the EV sector.