Senior US officials are discussing whether to raise tariffs on electric vehicles (EVs) made in China, plus some other goods, the Wall Street Journal said on Wednesday.
The report follows a request to the Biden administration by a bipartisan group of US lawmakers last month to hike tariffs on Chinese cars and consider ways to stop Chinese firms from exporting vehicles and other products to the United States from Mexico.
Three of China’s biggest carmakers – MG, BYD and Chery – have been speaking to officials in Mexico about setting up factories in Mexico, while another is discussing building a $12-billion battery plant, according to a report by the FT.
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US fears Chinese EVs getting in via ‘back door’
The Biden administration is concerned that Chinese carmakers will try to sidestep the measures in the Inflation Reduction Act – which had curbs to specifically exclude Chinese EVs, batteries and other parts from the North American supply chain – to build cheap EVs in Mexico.
“Top members of the Republican-led House Select Committee on China wrote in a recent letter they were worried Chinese companies would use Mexico as a ‘back door’ into their market, the report said.
Exports of Chinese vehicles have risen in recent years, because of slowing domestic demand and overcapacity, and are expected to climb by 25% next year to 5.3 million units, China Merchants Bank International has said.
Chinese automobiles currently face a 25% levy introduced during the administration of former President Donald Trump and extended by his successor.
The US government is debating Trump-era duties on roughly $300 billion of Chinese goods, aiming for early next year to wrap up a long-running review of the tariffs, the paper added.
Clean energy exports also discussed in long review
The Biden administration is also considering lowering tariffs on some Chinese consumer products that officials do not see as strategically important, in addition to the potential increases on clean-energy products, the paper said.
Foreign automakers including Tesla also use China as a major export hub.
Lawmakers have said earlier that US automakers are exporting Chinese-made vehicles to the United States, a sign that current import tariffs are insufficient.
China will follow developments closely and take necessary measures to safeguard its legitimate interests, a spokesperson of its foreign ministry told a daily briefing on Thursday.
The office of the US Trade Representative and the National Security Council did not immediately respond to a Reuters request for comment.
- Reuters with additional editing by Jim Pollard
NOTE: Further details were added to this report on December 21, 2023 about Chinese carmakers’ plans to build factories in Mexico.
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