The Underlying Impact on Trade From Biden's Support of the Electric Mobility Efforts
Throughout 2021, the administration and Congress have made clear the support for US domestic manufacturing of the electric mobility supply chain. Their goal is to both boost economic growth and reduce US carbon emissions.
In 2022, the implementation of Washington’s efforts will have a profound impact on the entire global EV supply chain. For example, another consequence from the boost to the EV sector will come from the enforcement of US trade rules and the impact on the global supply chain.
Background
- Since the earliest days of this Administration, the president has oft-repeated his strong support for the US EV sector.
- A number of Executive Orders issued by the Oval Office demonstrate that commitment, in particular, Biden’s Day-One Executive Order that was issued on August 5, 2021, entitled: Statements on the Biden Administration’s Steps to Strengthen American Leadership on Clean Cars and Trucks | The White House. Following Biden’s Day-One Executive Order, EPA and NHTSA came out with new fuel efficiency and emission standards aligning with this effort.
- For its part, Congress has considered two broad legislative efforts with provisions for the electric mobility sector.
- These legislative developments will have a profound impact on cross border trade of EVs and their components and will require companies to be knowledgeable about how the USMCA affects EV trade consequences.
What to Know
Two Game-Changing Pieces of Legislation:
- Passed in November 2021 and now law, the Infrastructure and Jobs Investment Act (IJIA) injects considerable federal funding into the EV platform, including goals to electrify school and transit fleet vehicles and expand EV infrastructures such as charging stations and other platforms.
- Passed in the House in November 2021, and now pending Senate action, the Build Back Better (BBB) legislation would provide consumer incentives for plug in electric vehicles with added incentives for such vehicles with certain batteries manufactured in the United States and where the vehicle’s final assembly takes place in the United States and at plants with organized labor.
- Rulemaking for the IJIA is expected early in 2022. The fate of BBB remains unclear for 2022, with the Senate likely to introduce modifications to the bill if and when that Chamber takes up the legislation.
- A number of US trading partners, including Canada and Mexico, have threatened retaliatory measures if the EV incentives of the House version are enacted as these, they argue, violate US obligations under the USMCA.
- For manufacturers and assembly operations throughout North America, the USMCA tariff preferences in place since July 2020 will become even more crucial to consider.
How We Can Help
Readers can keep abreast of US trade developments for the electric mobility sector by visiting our website at Electric Mobility | Arent Fox, in which we describe how our USMCA Diagnostic | Arent Fox can help company executives understand the role of US trade rules to mitigate their legal risk exposure and discover potential revenue opportunities.
Our “Five Questions/Five Answers” podcast series provides timely discussions on fast paced developments in Washington. Topics such as US tariff action on imports from China are highlighted in US-China Tariffs and Your Supply Chain | Arent Fox, and readers can subscribe to these and future podcasts on their favorite podcast platforms.
