© Reuters. FILE PHOTO: A view exhibits the city space of the municipality of Santa Catarina close to the land the place Tesla has indicated it might construct a brand new gigafactory, in Santa Catarina, on the outskirts of Monterrey, Mexico February 28, 2023. REUTERS/Daniel Becerril/Fil
By David Shepardson
WASHINGTON (Reuters) -The U.S. authorities ought to block the import of low-cost Chinese language autos and elements from Mexico, a U.S. manufacturing advocacy group mentioned on Friday, warning they may threaten the viability of American automotive firms.
“The introduction of low cost Chinese language autos – that are so cheap as a result of they’re backed with the ability and funding of the Chinese language authorities – to the American market might find yourself being an extinction-level occasion for the U.S. auto sector,” the Alliance for American Manufacturing mentioned in a report.
The group argues the USA ought to work to stop cars and elements manufactured in Mexico by firms headquartered in China from benefiting from a North American free commerce settlement. “The industrial backdoor left open to Chinese language auto imports needs to be shut earlier than it causes mass plant closures and job losses in the USA,” the report mentioned.
Autos and elements produced in Mexico can qualify for preferential remedy below the U.S.-Mexico-Canada commerce settlement in addition to qualifying for a $7,500 electrical car (EV) tax credit score, the report famous.
The Chinese language embassy in Washington mentioned in response that China’s vehicle exports “replicate the high-quality growth and powerful innovation of China’s manufacturing trade… The leapfrog growth of China’s auto trade has supplied cost-effective merchandise with top quality to the world.”
The problem has acquired new curiosity after information studies that China’s BYD (SZ:) plans to arrange an EV manufacturing unit in Mexico. BYD, identified for its cheaper fashions and a extra assorted lineup, just lately overtook its greatest rival, Tesla (NASDAQ:), to turn out to be the world’s prime EV maker by gross sales.
Tesla introduced plans virtually a yr in the past to construct a manufacturing unit within the northern Mexican state of Nuevo Leon. In October, Mexico mentioned a Chinese language Tesla provider and a Chinese language expertise firm would make investments practically a billion {dollars} within the state.
A bipartisan group of U.S. lawmakers has urged the Biden administration to hike tariffs on Chinese language-made autos and examine methods to stop Chinese language firms from exporting to the USA from Mexico.
A bunch of lawmakers urged U.S. Commerce Consultant Katherine Tai to spice up the 27.5% tariff on Chinese language autos and mentioned her workplace “should even be ready to handle the approaching wave of (Chinese language) autos that might be exported from our different buying and selling companions, equivalent to Mexico, as (Chinese language) automakers look to strategically set up operations outdoors of (China).”
Alliance for Automotive Innovation CEO John Bozzella has mentioned that proposed U.S. environmental rules might let China achieve “a stronger foothold in America’s electrical car battery provide chain and finally our automotive market.”
The U.S. Treasury issued tips in December on the $7,500 EV tax credit score aimed toward weaning the U.S. EV provide chain away from China.
