House Select Committee Urges Administration to Hike Tariffs on Chinese Cars

The chairman and top Democrat on the House Select Committee on China asked U.S. Trade Representative Katherine Tai to consider launching a new Section 301 investigation for autos, in order to examine the harm that China's subsidization and technology transfer practices could do if Chinese electric vehicles start entering the U.S. in large numbers.

Electric vehicles and electric vehicle batteries from China are covered by the first Section 301 investigation, and there is an additional 25% tariff applied to those goods, but the lawmakers say it is critical that those tariffs are hiked further "to stem the expected surge" in Chinese imports. They suggest government subsidies will allow Chinese cars to overcome a combined 27.5% tariff.

The letter, dated Nov. 7, was also composed by select committee members from Michigan, Republican John Moolenaar and Democrat Haley Stevens.

"For more than a decade, the 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," they wrote. They said as a result, Chinese automakers' electric vehicle exports have surged 851% in the last three years. "Made in China 2025 and the PRC’s Mid-to-Long-term Automotive Plan released in 2017 specifically called for PRC brands to become world leaders by 2025. With China now the world’s largest electric vehicle market, the PRC represents 60% of global electric car sales." The lawmakers added, "With the PRC controlling nearly 76 percent of global battery cell production capacity, the PRC government has ensured that PRC automakers have a strategic advantage in their ability to build EVs at lower prices."

They complained that BYD, Chery and SAIC motors have established themselves in Mexico, and they said that China shouldn't gain a back door to the U.S. market by producing in North America.