Chinese Companies Discover Biden Tariff Loophole

( – President Joe Biden has revealed his plan to increase tariffs on electric vehicles (EVs) made in China by fourfold. This plan was intended to eliminate the threat to US automakers from competing with more EVs from China. Unfortunately, experts in the trade and automotive sectors state that this will most likely not be the result.

The tariffs on China would increase to 100 percent for EVs, 50 percent for solar cells, and 25 percent for lithium batteries. Tariffs on aluminum and some steel products will increase to 25 percent. Janet Yellen, the US Treasury Secretary, claims that these increased tariffs will protect the jobs that Americans currently hold.

Chinese manufacturers could potentially circumvent the substantial new fees by leveraging a loophole. The existing 25 percent tariff on EV imports from Mexico could enable cheaper Chinese-made EVs to undercut US prices. This strategy could see China shift its manufacturing to Mexico to evade the new tariff.

Experts claim that the announced tariff increase may only delay the Chinese EVs from entering the US until they can open factories in Mexico. The Chinese Communist Party (CCP) is planning to build its BYD automaker factory in Mexico. With the current tariff rates that apply to EVs built in Mexico, the BYD EVs will hardly face any tariffs. However, their executives claim that they will not sell their current factory’s pickup in the US, despite its imminent launch.

Dan Hearsch from AlixPartners, a consulting firm, stated that a confrontation between China and the US manufacturers is inevitable. He claims the US automakers’ preparations to either work with China or compete with them by making better products should happen soon.

According to Katherine Tai, the US Trade Representative, tariffs on Mexico’s products sent to the US may be considered. She stated that Mexico has imported more products than China in the past year.

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