'Hissy fit' fallout: trade minister speaks with U.S. envoy over tax-credit comment

International Trade Minister Mary Ng exchanged words with the U.S. envoy to Ottawa on Thursday after he accused Canada of pitching a "hissy fit" over President Joe Biden's original plan to encourage the sale of electric vehicles.

David Cohen used the phrase in an appearance Wednesday at the Wilson Center's Canada Institute in Washington, D.C., that was aimed at dispelling Canadian concerns about protectionist rhetoric from the White House.

"Minister Ng spoke to Ambassador Cohen about the comments, and reiterated Canada's commitment to working together to strengthen North American competitiveness," said Ng's spokesperson Shanti Cosentino.

Cosentino would not elaborate, except to say the exchange took place via text message.

Cohen's comments came after the speech during a question-and-answer session with Canada Institute director Chris Sands about the availability of U.S. funding for Canadian companies looking to expand their operations.

He was pushing back against the perception in Canada that U.S. initiatives in signature legislation like Biden's infrastructure law and the Inflation Reduction Act are overly geared toward American suppliers.

Cohen arrived in Ottawa in December 2021, at the height of Canadian complaints about Biden's tax-credit plan, which saved the richest incentives for electric vehicles assembled in the U.S. with union labour.

Industry stakeholders and the federal government in Ottawa characterized the idea as an "existential threat" to a Canadian auto sector that has worked hand-in-glove with its American counterpart for more than half a century.

"Canada, using a technical term, threw a hissy fit," Cohen said, adding that he recommended a more nuanced, "less jazzy" argument that eventually won the day and saw Canadian vehicles carved into the plan.

"All these elements are just evidence that there is no intent here to injure Canada," Cohen said. "The intent here is to build a resilient, powerful, prosperous North American economy."

That, in a nutshell, was the stated purpose of Cohen's appearance — and he's not the only one who's been making that case lately.

In a speech last week at the Brookings Institution in D.C., White House national security adviser Jake Sullivan outlined a foreign and economic-policy vision clearly aimed at soothing the jangled nerves of allies around the world.

He cited a laundry list of world-changing developments in recent years, from a shifting global economy that abandoned middle-class workers and a financial crisis that shattered any sense of economic security to climate change, the COVID-19 pandemic and Russia's year-old invasion of Ukraine.

"This moment demands that we forge a new consensus," Sullivan said — one based on diverse and resilient supply chains, robust labour and environmental standards and public services supported by capital.

"The idea that a 'new Washington consensus,' as some people have referred to it, is somehow America alone, or America and the West to the exclusion of others, is just flat wrong," Sullivan said.

"This strategy will build a fairer, more durable global economic order, for the benefit of ourselves and for people everywhere."

'Leveraging the Inflation Reduction Act'

He acknowledged that the sheer magnitude of the spending in the Inflation Reduction Act, which is where the revised North American EV tax credit measures are contained, has been a "source of friction" among allies, particularly in Europe.

He mentioned Biden's visit to Canada, which spawned a new task force on critical minerals that Finance Minister Chrystia Freeland christened at the White House earlier this week, and talks with European Commission President Ursula von der Leyen on building industrial capacity for the ongoing energy transition.

"We are leveraging the Inflation Reduction Act to build a clean-energy manufacturing ecosystem rooted in supply chains here in North America, and extending to Europe, Japan and elsewhere," Sullivan said.

"This is how we will turn the IRA from a source of friction into a source of strength and reliability."

The fact that this is only being enunciated now boils down to two things — electoral politics and U.S.-China relations — said Emily Benson, a transatlantic trade and technology expert at D.C.'s Center for Strategic and International Studies.

Domestically, Biden has confirmed he plans to seek re-election — and the prevailing political winds currently suggest he may be up against the brute-force America First approach of his old rival, Donald Trump.

"They're sort of an articulation of, 'Here's what we've been up to for the past couple of years, here's the vision, vote for us again,"' Benson said. "I think that's the simple thread to tie it together."

The more complex thread revolves around mounting tensions with China.

Anxiety turned to alarm in February after the U.S. shot down a Chinese spy balloon that had drifted through Canadian and U.S. airspace. Defense Secretary Lloyd Austin couldn't get his Chinese counterpart to pick up the phone.

And just this week, officials in Manila reported aggressive Chinese behaviour last month in the South China Sea. A Chinese warship nearly collided with a Philippine Coast Guard patrol.

"That encapsulates where relations are headed, and the Chinese are not really willing to set up this emergency hotline with the Americans," Benson said.

'Trying to turn the temperature down'

She noted another high-profile policy speech last month, this one by U.S. Treasury Secretary Janet Yellen, that struck a nuanced tone.

"The president and I believe that China and the United States can manage our economic relationship responsibly," Yellen said in an address at the Johns Hopkins School of Advanced International Studies.

"We can work toward a future in which both countries share in and drive global economic progress. Whether we can reach this vision depends in large part on what both countries do in the next few years."

Both the Sullivan and Yellen speeches "were an effort to say, 'We're trying to turn the temperature down, we're re-imagining things, we have this new vision for a world order,"' Benson said.

"If you look inward, it's aimed at the electorate for the upcoming cycle. And then if you look internationally, it's really geared to trying to secure a meeting with the Chinese."