A bipartisan group of U.S. lawmakers has urged the Biden administration to consider increasing tariffs on Chinese cars and strengthening rules on countries of origin to prevent Chinese electric vehicles (EVs) from flooding the United States.
The group, led by Rep. Mike Gallagher (R-Wis.), who chairs the House Select Committee on the Chinese Communist Party (CCP), expressed concerns that due to Beijing’s unfair policies, Chinese EVs might soon flood the U.S. market, hurting American automakers and workers.
“For more than a decade, the [People’s Republic of China (PRC)] has given its homegrown automakers an unfair competitive advantage, providing them with discriminatory government subsidies and preferential market access policies, while pressuring foreign automotive firms to localize and transfer their core technologies to PRC firms,” the four lawmakers wrote in the letter, dated Nov. 7, to the office of Trade Representative (USTR) Katherine Tai.
Mr. Gallagher, along with Rep. Raja Krishnamoorthi (D-Ill.), the top Democrat on the committee, and Reps. Haley Stevens (D-Mich.) and John Moolenaar (R-Mich.), called on urgent actions to prevent China’s EVs from dominating the U.S. market.
China’s EV exports have skyrocketed by 851 percent in the past three years, accounting for 60 percent of the global EV market, according to the lawmakers. China has surpassed Japan to become the largest car exporter for the first six months, they added.
They requested that Ms. Tai consider starting “a new Section 301 investigation into these practices and the harm they pose to the American automotive industry and American workers.”
Section 301 of the Trade Act of 1974 allows the United States to impose sanctions against foreign countries violating U.S. trade agreements. The law grants “USTR to investigate and take action to enforce U.S. rights under trade agreements and respond to certain foreign trade practices.”
The lawmakers said Beijing used a state-led economic model to support massive financing for EVs. They cited the Chinese EV maker Nio case, which lost $835 million in the second quarter of 2023, or $35,000 per car, but it can survive because of at least $2.6 billion in funding from Beijing.
In addition, the CCP’s control of critical raw materials and 76 percent of global battery production gives it a significant advantage for a competitive EV price, the lawmakers said.
The Epoch Times reached out to the USTR for comment but received none by press time.
Raising Tariffs
U.S. cars currently haven’t faced fierce competition from China-made vehicles because of the 25 percent tariff imposed during the Trump administration that has been renewed during the Biden administration.
However, the committee said that with substantial subsidies from the CCP, Chinese EV makers could withstand the loss of the current 25 percent imposed on China-made vehicles to compete in the U.S. market successfully.
The lawmakers said, “It is critical that tariffs on China automobiles not only be maintained but also increased to stem the expected surge in [China] imports.”
“The trend of shifting production from the United States to [China] underscores that the current tariff level on imported vehicles from China is insufficient,” they added.
Strengthening Regulations on Countries of Origin
The lawmakers warned that the Chinese EVs could bypass U.S. tariffs by establishing their operations in U.S. trading partners to take advantage of favorable tariffs. They said that the United States must prepare for the upcoming wave of Chinese EVs from Mexico as Chinese carmakers BYD, Chery, and SAIC have already built their plants there.
The committee wanted “USTR’s response on whether the current rules of origin in our trade agreements need to be strengthened and what other policy tools are needed to prevent the [China] from gaining a backdoor to the U.S. market through our key trading partners. ”
Automakers in the United States have raised concerns about Chinese automakers.
Alliance for Automotive Innovation CEO John Bozzella said in June that proposed U.S. environmental regulations could let China gain “a stronger foothold in America’s electric vehicle battery supply chain and eventually our automotive market.”
Growing Obstructions
In several key markets outside China, Chinese EV makers have faced growing obstructions from local governments.
In Australia, the government blocked China from buying a local lithium producer and stopped a Chinese investor from raising its stake in a rare earth miner.
In Europe, China’s EVs enjoy a lower tariff of 10 percent and its green policy, which has opened up opportunities for them in the bloc. As a result, EU automakers are losing the EV competition in their own market, mainly to Chinese competitors.
In September, the European Commission officially began to open an anti-subsidy probe into Chinese EVs. Earlier, European Commission President Ursula von der Leyen said: “Global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies.”
Reuters contributed to this report.
From The Epoch Times