Republican senator wants to hike tariffs on Chinese vehicles

By Thomson Reuters Feb 28, 2024 | 6:06 AM

By David Shepardson

WASHINGTON (Reuters) – Republican Senator Josh Hawley is introducing on Wednesday legislation to hike tariffs on Chinese vehicle imports amid growing concerns about the impact of these vehicles on U.S. car companies.

Hawley’s bill would raise the base tariff rate to 100% from 2.5 percent currently, which would mean a total tariff of 125% on all imported Chinese autos from 27.5% currently. It also seeks to apply the 100% tariff hike to vehicles assembled in Mexico by Chinese-based automakers.

Hawley said President Joe Biden should take steps to protect U.S. auto workers “from the existential threat posed by China.”

A bipartisan group of lawmakers in November urged U.S. Trade Representative Katherine Tai to boost tariffs on Chinese vehicles, saying she should plan “to address the coming wave of (Chinese) vehicles that will be exported from our other trading partners, such as Mexico, as (Chinese) automakers look to strategically establish operations outside of (China).”

Tai said last month the Biden administration is closely reviewing “China’s non-market policies and practices in its automotive industry” and reviewing current tariff levels. Tai said she is concerned about Chinese vehicle exports noting high U.S. tariffs “have also encouraged Chinese firms to set up operations outside China.”

On Friday, a U.S. manufacturing advocacy group urged Biden to block low-cost Chinese autos and parts from Mexico.

“The introduction of cheap Chinese autos – which are so inexpensive because they are backed with the power and funding of the Chinese government – to the American market could end up being an extinction-level event for the U.S. auto sector,” the Alliance for American Manufacturing said in a report.

Donald Trump, who is seeking a second term as president in November, has threatened to impose hefty new tariffs on Chinese vehicle imports after hiking tariffs by 25% when he was president.

The Chinese embassy in Washington said China’s automobile exports “reflect the high-quality development and strong innovation of China’s manufacturing industry… The leapfrog development of China’s auto industry has provided cost-effective products with high quality to the world.”

The issue has received new interest after news reports that China’s BYD plans to set up an EV factory in Mexico. BYD, known for its cheaper models and a more varied lineup, recently overtook its biggest rival, Tesla, to become the world’s top EV maker by sales.

(Reporting by David Shepardson; editing by Miral Fahmy)