OTTAWA — Prime Minister Justin Trudeau heads to Washington today, two days after President Joe Biden signed a US$1.2-trillion infrastructure bill that makes it even harder for Canadian businesses to supply materials for billions in new transit, roads, power grids, port upgrades and broadband infrastructure.

But with that much money in play, the bill still means plenty of opportunity.

In the bill, Congress asserts that “taxpayers expect that their public works infrastructure will be produced in the United States by American workers,” and sets new, higher standards for American content.

For manufactured products like train cars, over 55 per cent of the final object’s total cost has to have been expended in the United States. For iron and steel and other construction materials, “all manufacturing processes … from the initial melting stage through the application of coatings, [must have occurred] in the United States,” if federal money is helping pay for it.

If the U.S. doesn’t make those materials or components, or buying American would raise prices by over 25 per cent, there are waivers. But those are more limited than the last time the U.S. spent big on infrastructure, after the 2008 financial crisis, when a side agreement exempted Canadian suppliers from Buy American rules under several of the American Recovery and Reinvestment Act’s programs.

Upgraded American infrastructure will be good for Canada, said Trevor Kennedy, the Business Council of Canada’s international-policy director. Ports that transfer goods more efficiently, roads and rail lines that move people and materials and finished products faster, data and power networks that are more robust—those are all good for Canadian businesses that trade with the United States.

But protectionism is not, he said, especially after Canada, the U.S. and Mexico spent many months negotiating a new North American free-trade treaty. “This is really counter to some of the objectives we’ve all been pursuing,” he told The Logic in an interview.

Even businesses that aren’t shut out of U.S. projects will have to jump through hoops, Kennedy said. At a minimum, accounting in detail for the American elements in their products and services; more substantially, rejigging their operations to buy more American inputs and do more work on American soil.

“What happens is you have part of your supply chain designed for Buy American and part of it designed for North America to compete globally,” Kennedy said.

Pursuing some kind of carve-out or exemption for Canadian vendors has to be a top priority for Trudeau in Washington, Kennedy said, and “it’s critical that Canada is at least understood.”

That will be a priority, the prime minister has promised.

“It’s counterproductive for the Americans to put barriers and limits on commerce between our two countries,” Trudeau said in French in a news conference in Edmonton on Monday. “It’s a subject I’ve very often raised with President Biden, and it will certainly be part of the important conversations we’ll have later this week.”

With Democrats and Republicans apparently aligned on economic nationalism these days, Kennedy said there’s limited room for Canada to insert itself. But still some.

Inflation is a concern on both sides of the border, for instance—hitting 6.2 per cent in the U.S. in October and topping four per cent in Canada in both August and September. “Slapping huge tariffs, which are just taxes, and these regulatory barriers onto trade and economic activity increases prices,” Kennedy said.

And there’s a constituency for the idea that governments should help their industries compete, not live in shelters, he added. “I think the free traders are still there. They’re just looking for an opportunity.”

Here are some of the Canadian companies and sectors that stand to be affected by the bill:

Construction and engineering: One Canadian company that could benefit from an infrastructure spending spree in the U.S. is Edmonton’s Stantec, which recorded nearly $2.7 billion in revenue from the United States last year. In a research note Monday, BMO Capital Markets observed that Stantec and Montreal’s WSP Global have record-high “soft backlogs” of projects in the U.S. that are planned but not funded—just waiting for the money to go ahead.

Another is SNC-Lavalin. The Montreal-based multinational has numerous U.S. subsidiaries and booked nearly $1.4 billion in revenue there in each of 2019 and 2020, about a fifth of its income. It’s even currently doing project management, engineering and systems integration on a rail-transit line in the Washington, D.C. suburbs, which got US$900 million in federal funding in 2017.

Electric vehicles and transit: The North American leaders’ summit may include tough talk on passenger electric vehicles, with proposed consumer incentives that favour U.S. assembly and component manufacturing. But the infrastructure bill does have an upside for some cross-border manufacturers of commercial vehicles, like buses, and charging infrastructure.

Winnipeg-based NFI Group, maker of electric New Flyer buses, said the long-term, stable funding in the bill gives local transit agencies more surety to act on multi-year fleet-replacement plans and expanded service. CEO Paul Soubry told The Logic that Buy America content requirements for buses predate the latest infrastructure bill, so his assembly lines are already poised to benefit from a 1,270 per cent increase in the Low or No Emission Vehicle Grant Program.

Marc Bédard, founder and CEO of Lion Electric, said in an earnings conference call with analysts last week that the infrastructure bill would “unblock sizable funding” for fleet electrification, noting that half of the $1 billion in annual funding for clean school buses over the next five years for is set aside exclusively for zero-emission school buses. Quebec-based Lion, which makes electric school buses, transit buses and heavy-duty trucks, also has a grant team to help customers get funding and subsidies on both sides of the border, and an energy team that brokers deals for charging infrastructure, which he sees as “ideally positioned” in the current funding environment. 

Besides US$39 billion in transit funding, the bill includes US$66 billion to upgrade Amtrak service. That should mean a lot of work for train manufacturers.

Alstom, the France-based trainmaker that finalized its purchase of Bombardier’s rail division early this year, has extensive U.S. operations and boasts it “can achieve 95 per cent domestic content or higher on its railcars” there.

Alstom is raring to go, U.S. spokesperson Maryanne Roberts told The Logic, and can mix and match production depending on what buyers want.

“Depending on our customers’ specific needs and on local content requirements, we are able to modulate the allocation of work at our facilities and use our expertise here and elsewhere in the world to present competitive offers with the best products and the best price,” she said by email.

Hydrogen fuel: Randy MacEwen, president and CEO of B.C.’s Ballard Power Systems, said in an earnings call last week that the bill reflects an opportunity for the company, signalling that global market adoption of hydrogen is in “the first second of a 24-hour day.” He said US$8 billion in the infrastructure bill funding clean hydrogen hubs will help match hydrogen power supply and demand, which he sees as “critically important” for mobility applications like Ballard’s. Another US$1 billion toward the research, development and demonstration and commercialization for electrolyzer technologies could effectively reduce the cost of hydrogen produced by electrolyzers to less than US$2 per kilogram by 2026. Combined with potential tax credits that could also be passed, in the U.S., MacEwen said Ballard’s “very optimistic” about fuel cells in the U.S., “which is a fairly sharp contrast to where we were a year ago.”

Electricity grids: The U.S. bill includes US$73 billion to modernize electricity grids and promote renewable energy, after major recent failures in Texas and California. Hydro-Québec is eager to supply electricity it generates, despite opposition to specific projects in parts of the U.S. Northeast. Spokesperson Lynn St-Laurent told The Logic in an email that Hydro-Québec hopes the bill’s funding helps replace fossil fuels with clean power sources.

The way Hydro-Québec works could help it with the new U.S. rules, because the Quebec utility “does not develop transmission projects on American soil, but rather joins forces with an American partner who carries out these projects,” she wrote in French.

Cryptocurrency: The U.S. has to pay for the infrastructure bill somehow, and one suggested “pay-for” has the cryptocurrency industry up in arms. The bill expands the definition of a “broker” with tax-reporting requirements to include anyone “effectuating transfers of digital assets on behalf of another person,” with the Joint Committee on Taxation estimating the change will generate US$28 billion in new revenue over 10 years.

The problem, according to lobbyists for the cryptocurrency industry, is that the expanded definition of a broker could impose transaction-reporting requirements on miners, software-wallet makers and decentralized exchanges—some of which don’t currently collect that information.

The lack of clarity around what a “broker” is means it’s not yet clear how the bill might affect Canadian crypto-trading platforms with U.S. customers: “I think exchanges have to be careful about this,” said Jonathan Ip, a lawyer who advises blockchain and cryptocurrency companies.

Canadian clients of popular U.S. crypto platforms like Coinbase are probably in the clear, as long as they don’t meet U.S. tax-residency requirements, said Calgary-based crypto lawyer Matthew Burgoyne: “Generally speaking, I don’t think most Canadians who are users of U.S.-based crypto exchanges have much to worry about.”