We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
{{ subpage.title }}
Striking United Auto Workers members picket outside the Stellantis Jeep Plant in Toledo, Ohio.
Autoworkers’ strike highlights Biden’s union problem ahead of 2024 vote
Bad news for US President Joe Biden: as the United Auto Workers’ strike enters its fifth day, labor and climate priorities are colliding in a crucial election year.
While Biden calls himself the most “pro-union president in American history,” a wave of major private sector strikes is the last thing he wants as he heads into 2024. What’s more, in addition to their grievances with Big Auto, the UAW sees a threat in another of Biden’s priorities: his green agenda. Most plants that produce electric vehicles are not unionized, and many of the batteries they require are made in China. This is catnip for leading GOP candidate Donald Trump, who called on workers to “stand strong against Biden’s vicious attack on American labor,” as well as fellow Republicans who blame Biden’s Inflation Reduction Act and electrification push for workers’ troubles.
Democrats traditionally depend on a coalition of labor and progressive voters; any erosion of that support weakens their re-election prospects in what could be a tight race in 2024. Biden also needs to hold the state of Michigan, where the UAW is a strong player: in 2020, Biden just barely won the state’s 16 electoral votes.
A prolonged autoworkers’ strike would seriously damage the American economy, imperiling Biden’s re-election bid. And yet Union Joe has to walk a fine line. Last Friday he attempted to shore up his union bona fides, stating that “record corporate profits… should be shared by record contracts for the UAW.”
But that, in turn, only raised the ire of business interests. US Chamber of Commerce president Suzanne P. Clark accused Biden of “promoting unionization at all cost.” Biden can’t catch a break – and it’ll only get tougher as election day approaches.
U.S. President Joe Biden gives a fist bump salute to the audience during an event to celebrate the anniversary of his signing of the 2022 Inflation Reduction Act legislation, on Aug. 16, 2023.
Viewpoint: Challenges facing Biden’s IRA one year later
Key to President Joe Biden’s agenda, the Inflation Reduction Act, which was signed into law on Aug. 15, 2022, contains about $400 billion in new spending and tax breaks aimed at jumpstarting the transition to a low-carbon economy in the US. Alongside the Chips+ Act and the Bipartisan Infrastructure Law, the IRA also aims to reinvigorate US manufacturing to allow the country to better compete with China.
Biden’s embrace of industrial policy to achieve these aims has been controversial because of its expense and the concerns of trading partners that the massive government assistance gives US firms an unfair advantage. So, is the bet paying off? We sat down with Eurasia Group expert Milo McBride to ask him what the IRA has achieved in its first year.
What are some tangible impacts of the new legislation?
The IRA has already prompted investments of about $270 billion in the power sector, $50 billion in electric vehicle supply chains, and smaller yet significant contributions in other sectors. If the policy continues as planned, analysts at Goldman Sachs expect it to generate about $3 trillion of investment by the early 2030s – underscoring its potential to integrate EVs and other clean energy systems into everyday American lives. Specific projects to highlight include the Battery Belt, a comprehensive EV and battery hub that spans from Michigan to Missouri, and the construction of enough solar manufacturing facilities to eventually produce the systems needed to meet much of the nation’s solar energy demands.
Is it meeting goals?
While the IRA is a step in the right direction for the Biden administration’s low-carbon energy agenda, it will fall short of delivering on US climate pledges. The IRA’s green industrial policy is an incentives- or “carrots”-based approach that provides subsidies for clean alternatives but doesn’t impose penalties on carbon emissions. The US has outlined goals to reduce its carbon emissions by 52% by 2030 from 2005 levels, and with the IRA, it will achieve reductions of somewhere between 32% and 42%, according to the Rhodium Group.
Scaling up US manufacturing is a massive endeavor that could undermine the goal of building a domestically resilient supply chain in the short term. For example, constructing battery gigafactories can be accomplished in a matter of years, but developing mines to produce the critical minerals needed by those factories may take a decade. Over the next couple of years, this dynamic will increase US reliance on imports, some of which will come from allies but also potentially from China.
What are the biggest domestic challenges?
There are myriad obstacles. The scale of renewables capacity being built requires an expansion of the electrical grid to transmit wind- and solar-generated electricity to areas of high energy demand. Yet the last major transmission line built in the US needed an astounding 15 years to secure the needed approvals, a bureaucratic problem that policymakers in Washington are unlikely to solve anytime soon. Similarly, while most forecasts expect EVs to account for about half of US car sales by 2030, this growth will require a massive expansion of public EV charging infrastructure. Under the Bipartisan Infrastructure Law, the government is disbursing $7.5 billion to the states to build public charging stations, but the rollout will be an enormous undertaking.
There is also concern about the availability of the workers needed to drive the energy transition at a time of record low unemployment. Low-skilled labor is needed to perform tasks such as the installation of solar panels, but high-skilled workers are also needed to build complex machinery like battery or solar components, which can require expertise in advanced robotics systems or the scientific intricacies of these components.
What are the political factors to keep in mind?
Although the IRA has led to the creation of a disproportionate number of green jobs in red states, Republicans in Washington remain strongly opposed to the legislation. Given this reality, the success of the IRA will hinge on the 2024 presidential election. If Biden or another Democrat wins, they will keep the IRA intact while advancing environmental regulations and furthering green energy partnerships with allies. However, if Donald Trump or another Republican wins, the outlook is less clear. In a second term, Trump could take a wrecking ball to his predecessor’s achievements (as in his first term). That said, Trump, in his uniquely unpredictable way, could decide he likes Biden’s industrial nationalism and try to take credit for it by rebranding it in his own image.
If the Republicans decide to repeal the IRA, certain facets of the policy will be more at risk than others. At the top of this agenda is gutting the massive budget that the IRA gives the Department of Energy and the Environmental Protection Agency, while also removing the tax credits that are used to subsidize new renewable energy projects. However, other policies such as subsidies for carbon capture and clean energy manufacturing would face less risk, as damaging US industry would be politically unpalatable, especially for an America First president. By January 2025, when the next presidential term begins, many of the factories that the IRA helped build would either be operational or under construction. Withdrawing the subsidies or sunsetting tax incentives that made them economically viable would risk a backlash from industry and investors.
How has this signature piece of industrial policy affected US relations with trading partners?
Initially, the protectionism enshrined in the IRA raised eyebrows among US allies, but as of today, it hasn’t produced a rift among trading partners. The Biden administration has sought to address initial frustrations with a series of clean-tech trade deals or partnerships with Canada, Japan, India, Australia (and likely the EU soon). It has also offered generous subsidies to Korean firms, including the energy department’s recent $9 billion loan to SK Innovation, a battery manufacturer that supplies Ford Motors.
Similarly, the IRA appears unlikely to trigger a subsidy race that would strain the finances of governments around the world (just Canada has emulated the US approach). The EU, for example, has prioritized regulatory reform alongside more modest subsidies to encourage greater investment in green industries.
How has Canada responded?
Though Canadian miners stand to benefit from increased US demand for essential critical minerals such as lithium, nickel, and graphite, policymakers don’t want to renounce the opportunity to participate in more lucrative segments of the green industry such as battery manufacturing. As a result, Ottawa’s 2023 budget mirrored many of the IRA’s tax credits and officials have pledged enormous sums to woo investments away from their larger neighbor. For example, the Canadian government has pledged $CA15 billion and $CA16 billion in subsidies for battery factories for Volkswagen and Stellantis, respectively, well above what the US government has pledged to such facilities.
While this competition is unlikely to disrupt the political and security-based alliances between the two nations, it will create challenges for Canadian policymakers trying to match the US’s fiscal firepower. In time, they will probably recognize the limits of this approach and focus more on promoting those projects Canada has already launched over trying to attract new ones.
Edited by Jonathan House, Senior Editor at Eurasia Group
Can Canada woo techies from the US and become a digital nomad hotspot?
The battle for tech talent between the United States and Canada is heating up. Last week, Canadian Immigration Minister Sean Fraser announced a suite of reforms aimed at attracting technology sector workers from around the world, including the US. The move comes as Canada struggles to respond to American green subsidies for energy and transportation as part of the Inflation Reduction Act.
Canada has long been wary of its global hegemon neighbor pipping it to the talent post. Brain drain – or “human capital flight” – has obsessed governments and commentators up north for decades. With Fraser’s new, multipronged immigration strategy, the country hopes to reverse the drain, and the US may be ill-positioned to fight back.
A four-pillar plan
Fraser’s four-pillar plan includes an “Innovation Stream” to attract talent to tech companies or “select in-demand occupations,” a “digital nomad” component to draw in folks who can do their work from anywhere, and amendments to existing programs to facilitate and extend tech-related work permits.
The spiciest bit? There’s a one-year plan for “a streamlined work permit for H-1B specialty occupation visa holders in the US to apply to come to Canada.” Those who enter via the program can later apply for permanent resident status if they meet the requirements. In short, Canada wants to poach foreign, pre-vetted tech workers residing in the US – up to 10,000 of them – and perhaps keep them.
While considered temporary, the program aims to provide laid-off tech workers in the US the chance to continue working in North America. Whether the program will continue past next year remains to be seen. But if the H-1B plan helps bolster Canada’s tech sector, there will be a good case for keeping it, no matter how the US responds.
The H-1B visa odyssey
The US H-1B visa is an employer-sponsored “nonimmigrant classification” for highly skilled workers from abroad, particularly in tech. The US allows up to 65,000 new visas each fiscal year, plus another 20,000 for applicants with advanced degrees from domestic colleges and universities.
Immigration attorney Andy J. Semotiuk, in a recent piece for Forbes, complained that the US needs to revise its H-1B visa program to ensure it remains competitive. He previously wrote that applying for the visa is a massive pain, requiring four applications and a long slog, including the requirement of a green card and employer labor certification to prove there are no American workers to fill the job.
Kylie Milliken, a researcher with Eurasia Group, says a major problem with the H-1B visa program is that the cap has not been raised since 2006. While it’s been working well, she notes, “it does not admit enough applicants to meet the needs of the labor market.” Despite calls from industry for changes, Congress hasn’t budged, which is no surprise, Milliken says, because “immigration is extremely divisive in the US, which makes policymaking difficult even when the government is under unified control.” In Canada, Fraser’s “streamlined” plan hopes to attract folks who’ve been able to get through the H-1B process, and their families, and permit them to work for “almost any employer anywhere in Canada.”
Any attempts by the US to respond to the Canadian plan, says Jon Lieber, managing director for the US for Eurasia Group, will be met by congressional deadlock on immigration. “The US is not likely to respond to anything Canada does because US immigration policy is not currently being set by the interests of US companies, but by domestic groups who are largely anti-immigration or at best immigration skeptics.”
That’s also why nothing’s been done to overhaul it to a more rational program, Lieber adds. “It’s basically working well for a small number of firms who benefit from it, and there’s no political will to expand it in the face of attacks.” That means no expansion to the number of applicants the US accepts and no replacement program that includes a pathway to citizenship.
Will visa holders move to colder climes?
Moving to Canada could be an attractive option for H-1B visa holders in the US who have recently lost their job because the visa is tied to employers. As Lieber says, those folks “are at the whims of their employers for their ongoing residency in the US.” So, someone who loses their job also loses their visa sponsor, leaving them with a stressful 60 days to find a new job.
As the US stares down a recession, the country has laid off nearly 200,000 workers so far this year, many of whom come from the tech sector. Alphabet has cut 12,000 employees, while Amazon let go 18,000 people, and both Microsoft and Meta eliminated 10,000 positions each. The US layoffs, and Canada’s inclusion of a path to citizenship within its H-1B program, might make applying to the northern alternative an attractive option for many.
Even though Canada’s tech talent-poaching plan is starting modestly, the US needs to keep its eye on the sector. “If the US wants to keep its tech industry robust and keep leading innovation,” Milliken says, “it will ultimately need to find a way to get more skilled workers into that space, whether by incentivizing American students to go into the tech and AI industries, allowing foreign-born graduates of US universities to work in the country longer after their student visa runs out, lifting the H-1B caps, or some other route.”
Canada’s H-1B plan launches on July 16, and the rest of its tech worker plan will unfold in the months to come, with the Innovation Stream due online by the end of 2023. By then, we should know whether Canada is managing to poach talent from the US – and whether it plans to aim for more in the years to come.
Canadian companies green with envy over US cleantech push
Canada has been wringing its hands over brain drain for decades. The appeal of a bigger market and higher wages in the United States has long wooed educated Canadians to move south. It’s also drawn the attention of policymakers concerned by those ditching their homeland and taking their businesses with them.
Today, it’s not just human capital flight but also industry flight that’s keeping Canadian leaders up at night. While neither country is keen to come out and say it – you know, as best friends and neighbors – Canada and the US are locked in a zero-sum subsidies battle over cleantech and other green industry growth. And the US is winning.
The Biden administration is pumping hundreds of billions in corporate subsidies into the economy just as the US market is warming to the green industry. With Canada facing a severe housing and healthcare crisis, both human capital and the companies employing those humans will increasingly look south.
Earlier this week, the CBC highlighted the story of Kanin Energy, a cleantech company based in Calgary that recently opened a Texas office to “double down and grow” in the US. The company’s CEO, Janice Tran, said that without more support from Ottawa, she’d be shifting operations and projects to the US. Some biofuel producers are threatening to do the same, with one, Parkland, having already made the move.
What’s in Canada’s arsenal?
Canada has a suite of green tax credits that include tax breaks for electricity investment, cleantech manufacturing, hydrogen investment, carbon capture and storage investment, and cleantech investment. Introduced in the March 2023 budget, the tax breaks are worth about CA$80 billion over the course of a decade. But this trails far behind the US, where the IRA is worth roughly US$370 billion (CA$480 billion). And if the shortfall wasn’t bad enough, now the Canadian Manufacturers and Exporters group says the Liberal government is moving too slow on getting the promised cash flowing. This increases the likelihood that businesses will chase IRA bucks south of the border.
An April report by TD Bank says Canada’s financial support for clean energy is “yielding positive results” and has “established a competitive position relative to the US.” It estimates that the government has spent “5% of nominal GDP” – or CA$139 billion – since 2021 on clean and green tech. This is a higher percentage of GDP than the US Inflation Reduction Act, which is 1.5% of the US economy. But the bank also notes – surprise, surprise – that the Canadian government must keep spending the big bucks to stay competitive with US subsidies.
Lest anyone think the capital cash funnel only runs from Canada to the US, Europe is facing a similar challenge. With an eye on a more generous and coherent subsidy regime, European green companies are moving to the US to chase IRA funding. Some are coming to Canada, too. Volkswagen took nearly CA$14 billion in subsidies to open an EV battery plant in St. Thomas, Ontario. In March 2022, multinational conglomerate automaker Stellantis struck a deal with the feds to build a plant in Windsor, Ontario – but it stopped construction in the wake of the VW package and is fighting for even more money that it’s likely to get. Canadian Finance Minister Chrystia Freeland says a new deal “is coming.” Stellantis was able to leverage both the IRA and the VW deal to extract more money from the federal government and the province of Ontario.
What’s not in Canada’s arsenal?
There’s more to all of this than the IRA and recent subsidy plays. Canada’s innovation and industry growth strategies are plagued – across sectors – by a handful of persistent shortcomings, experts say. Government departments are risk averse, the private sector is light on investment capital, bureaucracy is impossible to navigate, and the country is bad at procurement, especially when it comes to buying from and supporting its own domestic companies.
For decades, Canada has deployed a branch plant strategy that relies on luring foreign multinational corporations, particularly from the US, to set up shop in Canada. When Canada does try to invest in value-added industry, it’s late to the market – as it was with EV batteries, leaving the government without leverage and held hostage by established companies who extracted billions in subsidies, such as VW and Stellantis.
When companies do finally arrive, it’s foreign operators who gobble up all the tax credit and grant money while Canadian startups wither on the vine. The government doesn't bet on its own companies, leaving workers and businesses to choose to either fight with big foreign entities, to fold, or to flee.
That third option, leaving, seems to be increasingly appealing – so Canada faces massive pressure to preserve and grow its nascent cleantech industry. For its part, the US is keen to lean into growing its domestic producers, and to lure others away from Canada and Europe.
Mike Andrade, CEO of Toronto-based Morgan Solar, says Canada has a “risk-averse energy sector” that is addicted to, indeed captured by, the oil and gas industry and preferentially supported by provincial regulatory regimes that hamper cleantech development and implementation.
“Both countries north and south of the border are saying ‘We’re going to spend money on cleantech’ but north of the border, ours looks like more status quo continuation, and south of the border I see more disruptive things happening,” he says.
While the US is combining a more open attitude to cleantech development with a friendly market environment, Canada lags behind the US and other OECD countries in its approach to green energy projects.
“What Canada can’t keep up with is a regulatory structure that encourages innovation in energy combined with manufacturing subsidies to locate manufacturing plants in the states, all reinforced with preferential treatment for things made in the states for customers to buy,” Andrade says.
Canada needs to support its industries early and as they scale up, experts say. It could choose to go all-in on cleantech — solar, wind, batteries, or all of the above – but it would have to loosen its grip on oil and gas and the provincial regulatory regimes that keep the country reliant on it.
“Canada is exceptionally good at creating intellectual property and terrible at commercializing it,” Andrade notes. “And I think that’s where the focus of the money needs to be. How do we help these companies at the crossroads scale up and stay in Canada now that they’ve created the intellectual property?”
Trudeau jammed in EV trade war
International automaker Stellantis recently ordered workers to down tools at a CA$5-billion EV battery plant it is building in Windsor, Ontario, across the river from Detroit – an unwelcome surprise for PM Justin Trudeau and Ontario Premier Doug Ford.
To resume construction, Stellantis has made it clear it wants bigger subsidies than the CA$1 billion the politicians previously promised. In turn, Trudeau and Ford have been blaming one another and showing signs of distress as they scramble to come up with the cash.
Stellantis can afford to play hardball. After all, if Trudeau fails to deliver, the automotive manufacturing giant could hop across the river and set up shop in Michigan, where President Joe Biden’s Inflation Reduction Act promises a generous manufacturing subsidy pegged to production.
Flavio Volpe, president of Canada’s Automotive Parts Manufacturers' Association, thinks the standoff will end with a deal before long because Stellantis needs to get the plant running if it wants to meet its production targets. Also, the perspiring Canadian politicians can’t afford to send an unwelcoming message to other companies they are courting, let alone the voters of Windsor.
“Both sides of this negotiation know they have to end up where they originally started, which is making batteries in Windsor for electric vehicles in Windsor and Brampton,” says Volpe. “It makes it real difficult to try to grind out that last dollar from each other.”
Paying for jobs
Ontario has lots of things that EV manufacturers want: market proximity, plentiful low-carbon electricity, relatively easy immigration for skilled workers, and policy alignment on China and the desirability of working together across the border.
But the scale of the $370-billion Inflation Reduction Act, with its open-ended subsidies for EV manufacturers, has sector leaders driving hard bargains, and not just in Canada. Tata Motors, for example, is demanding 500 million pounds ($620 million) to build a plant in Britain.
Big players, like the US, Europe, and Japan, with massive borrowing power and large domestic markets, have enough leverage to establish EV industrial policy.
“For smaller markets with smaller budgets and less of a consumer market incentive in the US, there are less structured subsidies,” says Oliver Montique, Eurasia Group analyst, Industrials & Supply Chains. “So it's kind of a case-by-case basis.”
The scale of Canadian investments is eye-popping. Canada has agreed to pay VW up to CA$13 billion for a battery plant in St. Thomas, Ontario, that could employ 3,000 people, for example, and reportedly up to CA$19 billion to Stellantis, for 2,500 jobs.
“I don't know if it's been, let's say, really, forcefully evaluated from a cost perspective in terms of per job, but it's more a case of let's get them on shore, and then we'll deal with the rest later,” says Montique.
But Canada has little choice. If taxpayers don’t pony up, the industry will just move to the United States, says Graeme Thompson, senior analyst with Eurasia Group’s Global Macro-Geopolitics.
“If you don't meet or equal what the US is doing, then you risk not just that first investment, but all of the potential spinoffs down the road, which we can't possibly quantify with any accuracy, but you know must also be there. So you're really between a rock and a hard place.”
Pressure on the Canadians
That puts intense pressure on Trudeau’s ministers to make the deals.
“There are no days off on that one,” says Volpe.
Biden talked a good game about cooperation with Canada in Ottawa in March, but he has placed a huge bet on the IRA’s massive subsidies to revitalize American manufacturing. If it works, he might just get reelected next year. A new plant in Michigan might help with that. A new plant in Windsor? Not so much.
“There's a lot of supply chain integration in cars, for example, but at the end, it's not a symmetrical relationship on trade,” says Robert Asselin, senior vice president for policy at the Business Council of Canada. “They want their own stuff built in the US. That's what they want.”
Critical minerals, eventually
Asselin, a former policy and budget director in Trudeau’s government, says one thing his former colleagues can do to encourage EV manufacturing in Canada is speed up the approval process for mining critical minerals that manufacturers need to produce EV batteries. Canada has lots of lithium underground, for example, but little in production. Industry wants quicker approvals.
“At some point, investors will say, ‘Well, look, I'm not going to wait 15 years for someone to send me a letter to say you can do this. I'm going to move somewhere else,’” Asselin explains.
Biden has promised to support a bill from Senator Joe Manchin that would shorten American environmental approval processes to two years. The Europeans have a similar plan. Trudeau has promised reform but has taken no action. And it may not be easy. Mines require federal and provincial approval, and Indigenous land rights are constitutionally protected.
Canada’s environmental approvals are among the slowest in the world in part because Trudeau campaigned on improving protections. His brand, especially in Quebec, could be jeopardized if he steamrolls ahead with mines over objections from environmentalists and Indigenous communities. And demand for critical minerals is expected to be strong whenever Canadians get around to digging them up. The lithium isn’t going anywhere.
Trudeau’s Conservative opponent, Pierre Poilievre, whose support is concentrated in resource-producing western provinces, is promising to remove the “gatekeepers” standing in the way of projects. But if Trudeau makes mining too easy, he risks alienating his own supporters by taking steps that will help people who will never vote for him.
So long as Trudeau is prime minister, he’s more likely to just keep cutting checks.
Electric vehicle wars
Ahead of the G-7 summit in Japan, PM Justin Trudeau stopped in South Korea to chat with President Yoon Suk Yeol about security and economic ties. At the top of Trudeau’s list of priorities? Convincing South Koreans that Ottawa remains committed to Canada’s first electric-vehicle battery plant in the state of Ontario that, according to the companies building it, is currently on the chopping block.
But what does an EV mega factory in Windsor, Ontario, have to do with … South Korea?
Quick recap: The companies involved, Canadian auto giant Stellantis and Korean battery maker LG Energy Solution, have invested $5 billion in a mega plant that is scheduled to open next year. The project’s goals are ambitious: produce 1 million EV batteries annually and hire up to 3,000 people by 2027.
But Stellantis abruptly stopped construction this week, saying that Trudeau’s government was “not delivering on what was agreed to.” Ottawa had pledged around $1 billion, but that was before the Biden administration’s Inflation Reduction Act, which incentivizes companies to build up the EV industry in the US exclusively, wooing them with lucrative subsidies.
In response to a recent deal Ottawa made to provide up to CAD$13 billion worth of subsidies to lure Volkswagen to build a plant in Canada, Stellantis and LG have gone back to the well, reportedly demanding more support from Trudeau and threatening to pull the plug unless it gets the same treatment as the German automaker.
The federal government, for its part, says that Ontario’s provincial government must also pay its “fair share” to fund the subsidies.
Indeed, this row shows that the ripple effects of Biden’s protectionist IRA – which has also caused skirmishes with Mexico – are still reverberating almost a year after the bill was passed.
Still, there are signs that some cross-border tensions over the issue are easing, with US Transport Secretary Pete Buttigieg announcing this week the creation of a nearly 900-mile EV charging corridor between Kalamazoo, Michigan, and Quebec City, the first of its kind.
Secretary Buttigiegspoke about this and more with Ian Bremmer on this week’s episode of GZERO World. Catch a clip here and the full interview on PBS stations starting this Friday. Check local listings.Hard Numbers: Hitting IRA tax break pedal, wooing VW, riding the transcontinental rail, weeding through a lot more weed
7,500: Biden’s Inflation Reduction Act took effect on Tuesday and seeks to encourage electric vehicle adoption by offering a $7,500 tax credit for purchases of 10 EV models, benefitting American brands like Tesla and General Motors most. The IRA also makes any vehicle with battery components from the US, Canada, or Mexico eligible for half the credit, or $3,750, in an attempt to reduce the industry’s reliance on China.
13 billion: Justin Trudeau agreed to supply C$13 billion in subsidies over a decade to make Canada the location for Volkswagen AG’s first EV battery plant outside of Europe. The subsidies were needed to rival what the German automaker could have received via the Inflation Reduction Act by setting up shop in the US and are an investment in ensuring Canada is seen as a leader in advanced manufacturing and clean technology.
64,000: Canadian Pacific is buying Kansas City Southern in a railroad merger that will create North America’s first transcontinental railroad. It is expected to take 64,000 trucks off the road each year, easing the shipping of freight across the continent and reducing pollution. But the potential for increased rail traffic has some worried about safety and competition.
929: Cannabis seizures by American authorities at the US-Canada border are up a whopping 929% since Ottawa legalized marijuana in 2018. This is leading some to fear that Canada may become known as a source country. The surge is exacerbated by increased levels of e-commerce sales and Canada’s booming cannabis industry, which has already accrued $4 billion in revenue since legalization.Russian reservists recruited during a partial mobilization of troops attend a ceremony before departing to the Russia-Ukraine conflict zone, in the Rostov region, Russia October 31, 2022.
What We're Watching: Russian draft goes online, abortion pill ruling, US inflation slows, Taiwan gets new presidential candidate, Biden bets big on EVs
Russia’s digital draft
If you’re a young male citizen of Russia, it just got harder for you to hide from the war in Ukraine. The State Duma, Russia’s parliament, approved legislation on Tuesday that allows the government to send a military summons online instead of serving the papers in person. The upper house swiftly passed it into law on Wednesday.
“The summons is considered received from the moment it is placed in the personal account of a person liable for military service,” explains the chairman of the Duma’s defense committee, though the Kremlin insists no large-scale draft is imminent. If the person summoned fails to report for service within 20 days of the date listed on the summons, the state can suspend his driver’s license, deny him the right to travel abroad, and make it impossible for him to get a loan.
The database that provides names of potential draftees is assembled from medical, educational, and residential records, as well as insurance and tax data. Thousands of young Russians have already fled their country. Many more may soon try to join them.
Abortion pill stays on the market, but access rolled back
As the battle over abortion medication continues in the US, a federal appeals court has ruled that mifepristone – a drug approved by the Food and Drug Administration in 2000 – can remain on the market until the full case can be heard, likely by the Supreme Court.
Still, the court – made up of three appellate judges all appointed by Republican presidents – ruled that mifepristone cannot be sent by mail and rolled back a 2016 rule allowing it to be used up to 10-weeks gestation, dropping it back to seven weeks. It also rolled back other measures enforced by the Biden administration to enhance access after the gutting of Roe v. Wade.
This decision comes after a Trump-appointed, pro-life judge in Texas recently ordered a temporary stay on approval of mifepristone. Less than an hour later, another federal judge in Spokane, Washington, ruled that the drug must remain available in 17 Democratic-run states plus Washington, DC.
Importantly, the appeals court appeared to back the government's view that taking an approved drug off the market that accounts for more than half of all abortions nationwide would have “significant public consequences.”
As expected, abortion rights are shaping up to be one of the biggest political issues in the country. In Florida, Republicans are trying to fight a recently passed law banning abortion at six weeks, pushing for an outright ban.
US inflation cools — smartphones FTW
Good news for American households as US inflation fell to its lowest level in nearly two years in March. Prices grew at an annual clip of 5%, according to the latest figures released Wednesday. That’s down from 6% in February, marking the ninth consecutive month of falling inflation.
The highlights? Well, if you want to do some shopping in the US, now’s the time to cop a new smartphone, which will cost you 24% less than a year ago. And that summer road trip is on – gas prices are down more than 17%. At the same time, we remain “yolked,” as it were, to the Great Egg Crisis of 2023 — prices are up more than 30% despite easing a bit since February.
More broadly, that headline figure of 5% is still more than twice the pre-pandemic norm, and core inflation — which excludes volatile prices for fuel and food — is running at a toasty 5.6%.
That’ll keep the US Fed in the hot seat as it meets again in early May. Will they raise interest rates once more in a bid to finish off inflation? Or will they stand pat, worried about tipping the economy into a recession?
Will this man become Taiwan's next president?
Taiwan's ruling Democratic Progressive Party on Wednesday nominated VP William Lai as its candidate in the January 2024 presidential election.
Lai is widely viewed as a stand-in for term-limited President Tsai Ing-wen, reelected by a landslide in 2020. That means a tough line on China, which has made Tsai a darling in the West and reviled by Beijing. Lai used to support Taiwanese independence openly but has since moderated his position to align with the DPP's: We don’t need to formally break with the mainland because we’re already de-facto independent.
It's unclear who Lai will face, since the opposition Kuomintang Party — which, officially, is not pro-China but favors closer ties with China than the DPP — has yet to pick its candidate. (Terry Gou, the billionaire founder of Foxconn, the Taiwanese company that makes iPhones in China for Apple, is mulling another run.)
The vote will be Taiwan's most closely watched presidential election since 1996, when the self-ruled island ended decades of authoritarian rule. China responded to the democratic vibes by flexing its then-weak military muscles … until the US made it back off. This time, though, expect major Chinese fireworks if Beijing's candidate doesn't come out on top.
Biden’s ambitious new EV proposal
The Biden administration has proposed a new measure that would sharply accelerate the American auto industry’s transition to electric vehicles, and not everyone is happy about it.
The draft marks a big shift from Washington’s current carrots-based approach to boosting EV production to one that relies more on sticks. It would require carmakers to derive 60% of their sales revenue from electric vehicles by 2030, or face penalties. Currently, under a 2021 plan, the target is closer to 50% and manufacturers are allowed to opt in only if they want to. Under that plan, a range of subsidies and tax breaks aimed to incentivize consumers and manufacturers to ditch dirty fuel guzzlers.
Carmakers are already pushing back, saying that changes to assembly lines and supply chains will be expensive and take years to implement. But the Biden administration says the necessary funds were included in the Inflation Reduction Act, which earmarked $31 billion in subsidies for EV’s and tax credits for EV manufacturers.
Expect this to become a heated political issue in the coming months. Texas, despite being a leading investor in EV networks, has sued the federal government over the current EV standards, arguing that they are an overreach that violates states’ rights.