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Mazzei Minute: 12/10/21

President Biden has a special knack for studying a problem and then choosing the wrong-headed option that makes the problem worse. For example, look at the Afghanistan debacle and border crisis.

Well, he’s at it again with his climate agenda and his budget busting bill which, if enacted, will make the automotive supply chain problem worse than it already is. Have you swung by a car dealership lately and been surprised by the lack of cars on the lot?

Tucked away in the 2000-page budget bill is a special $12,500 tax credit for the purchase of an electric vehicle. Tax Credits for select politically favored interest groups distort economic production, but in this case Canadian and Mexican officials are furious because the credit isn’t applicable unless the vehicles are assembled at unionized U.S. factories. Batteries and most parts must also be made in the U.S. The Mexican Economy Minister Tatiana Clouthier said the protectionist Policy move was “incomprehensible”.

I guess Biden wants to copy Trump’s America First Agenda after all, but he’s picking an unnecessary fight after Trump already won. The Trump Administration and Congress implemented a new MCA trade deal with Mexico and Canada to replace NAFTA. There’s no need to “protect” the electrical vehicle industry. Companies like Tesla have plenty of consumer demand.

Rather, we need our partners involved in growing an efficient supply chain for electric vehicles to reduce overall costs for consumers. Instead, Canadian officials say the legislation will generate a trade response if enacted. Biden’s choice, therefore, will ultimately lead to higher costs and less electric vehicles for consumers. He’s good at ignoring the results of his decisions. Unfortunately, we have to live with the consequences.


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