A bipartisan group of U.S. lawmakers is urging the Biden administration to raise tariffs on Chinese-made vehicles and explore measures to prevent Chinese firms from exporting vehicles to the United States through Mexico. In a letter addressed to U.S. Trade Representative Katherine Tai, Representative Mike Gallagher, a Republican who chairs a select committee on China, and the panel's top Democrat, Raja Krishnamoorthi, along with Michigan Representatives Haley Stevens and John Moolenaar, have called for an increase in the current 25% tariff on Chinese vehicles.
The lawmakers stressed the importance of not only maintaining but also increasing tariffs on Chinese automobiles to counter the expected surge in imports. The 25% tariffs on Chinese vehicles were initially imposed during the presidency of Donald Trump and have since been extended by the Biden administration.
Furthermore, the letter suggests that the U.S. Trade Representative should consider initiating a new Section 301 investigation into Chinese vehicles. This investigation would assess the impact of Chinese vehicles on the American automotive industry and its workers and recommend appropriate actions to counter China's strategy to dominate the global automobile market.
The lawmakers also highlight the need to address the growing wave of Chinese vehicles exported through other trading partners like Mexico. Chinese automakers are strategically establishing operations outside of China to take advantage of preferential access to the U.S. market through existing free trade agreements.
Concerns have been raised by U.S. automakers regarding Chinese automakers gaining a foothold in the American electric vehicle (EV) battery supply chain and automotive market due to proposed U.S. environmental regulations. Similar concerns have led the European Commission to consider punitive tariffs to protect EU producers against cheaper Chinese EV imports.
The lawmakers recommend that the United States collaborate with its allies to implement a coordinated response that collectively reduces demand for Chinese vehicles in their markets. Notably, many Chinese-made EVs are produced by Western brands with significant production capacity in China, such as Tesla.
The letter also highlights that some U.S. automakers are exporting Chinese-made vehicles to the United States, underscoring the insufficiency of the current tariff levels on imported vehicles.
