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The Trump administration’s move to revoke California’s longstanding power to set vehicle-emissions standards threatens to cause confusion for North American auto manufacturers while casting doubt on the Trudeau Liberals’ climate-change agenda.

U.S. President Donald Trump announced his plans on Twitter Wednesday morning during a visit to Los Angeles, a city whose problems with smog in the 1960s led the U.S. Congress to grant California a waiver from federal emissions standards that has given the state unique authority to set tougher pollution targets for automakers.

Mr. Trump said revoking California’s waiver would allow the United States to create a single emissions standard for automakers and help to boost U.S. vehicle manufacturing. The White House has said it intends to roll back fuel-efficiency targets for cars and light-duty trucks that were set by the Obama administration in 2012.

“Many more cars will be produced under the new and uniform standard, meaning significantly more JOBS, JOBS, JOBS!” Mr. Trump said on Twitter. “Automakers should seize this opportunity because without this alternative to California, you will be out of business.”

The move represents a major escalation in tensions between the Republican President and the Democratic-controlled state over environmental policies.

California lawmakers said they intend to fight the decision in what they expect will be a lengthy court battle. “It will take years and years and years, and more uncertainty and more anxiety,” Governor Gavin Newsom told a news conference in Sacramento. “But California will prevail, because we’re leaders in this space.”

Revoking California’s waiver would plunge North American automakers into uncertainty, potentially setting the U.S. on course to create two vehicle-emissions standards, one for the 14 states that have backed California’s rules and another for those following less-stringent national requirements.

That has significant implications for Canadian automakers, who produce cars primarily for the U.S. market and who prefer to deal with a single set of regulations across the continent.

“I don’t think anybody wins on that one,” said Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association. “If you don't end up with a single national standard, then you end up with a bifurcated North American market and that has more downsides than upsides, including the environmental benefits.”

Competing North American standards also goes against the move toward closer economic integration that has underpinned years of negotiations over the updated North American free-trade agreement, Mr. Nantais said.

The Trump administration’s plan would also be a blow to the Trudeau Liberals’ climate-change agenda, and poses a challenge to whatever party forms the next Canadian government.

After automatically following U.S. auto-emissions rules for many years, the Canadian government signed a memorandum of understanding with California in June committing to co-ordinate with the state on tougher vehicle-emissions requirements, as well as on measures to encourage more consumers to buy electric vehicles.

The agreement – seen in the U.S. as a response to the Trump administration’s decision to pull out of the Paris climate accord – would be undermined if California loses the power to set its own standards.

The Canadian government said Wednesday that it intends to continue collaborating with California on vehicle emissions regulations.

“The MOU between the Government of Canada and the State of California will remain operational regardless of developments concerning California’s waiver under the U.S. Clean Air Act,” Gabrielle Lamontagne, a spokesperson for Environment and Climate Change Canada, said in an e-mail.

Analysts say the U.S. legal battle will likely force Canada to choose between either U.S. or California emissions targets.

“The risk obviously to Canada is that if we don’t make our own decision right now, and U.S. regulations for light-duty vehicles change, ours will automatically be rolled back,” said Isabelle Turcotte, director of federal policy at the Pembina Institute. “That’s what we need to ask ourselves: What do we want to do on climate? What do we want to do in terms of this specific piece of regulation?”

Canada is likely too small a market to exert much influence in the escalating political battle between the Trump administration and California, said auto industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants. If forced to choose, he said, Canada may press ahead with matching tougher California emissions standards, with higher costs to Canadian consumers as a result.

“Emissions standards, that is pretty fundamental,” he said. “Are you going to produce a different engine for California versus the rest of the U.S.? Or different engines for Canada? This becomes problematic and potentially very expensive.”

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