US suggests possibility of penalties if production of Chinese electric vehicles moves to Mexico

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The Biden administration has hinted at the potential for imposing additional sanctions if Chinese electric vehicle manufacturers attempt to relocate their production to Mexico as a means to circumvent the newly declared import levies.

On Tuesday, President Joe Biden instructed the U.S. Trade Representative’s office to levy a comprehensive tariff exceeding 102% on Chinese electric vehicles (EVs), and also announced new tariffs on a range of other imports from China, including steel, aluminum, semiconductors, and solar panels.

The Chinese EV firm BYD had previously expressed interest in exploring manufacturing locations in Mexico aimed at the local market. This development suggests that Chinese firms might seek to use Mexico as an indirect route to the U.S. market.

During a press briefing at the White House on Tuesday, when questioned about the new tariffs, U.S. Trade Representative Katherine Tai responded with a brief “Stay tuned.”

Tai elaborated that any additional sanctions in response to China’s potential establishment of factories would necessitate an independent process, distinct from the Section 301 review under the Trade Act of 1974. The conclusion of this four-year review resulted in the imposition of tariffs on Chinese goods valued at $18 billion, as announced on the same day.

Tai acknowledged the possibility of China utilizing Mexico as an alternative entry point into the U.S. market, stating that it is a subject of ongoing discussions with industry representatives, workers, and international partners.

Following Tai’s comments, the U.S. Trade Representative’s office indicated that it could consider various measures beyond tariffs to address the situation. It highlighted that the U.S.-Mexico-Canada Agreement contains specific provisions designed to combat unfair subsidies and attempts to evade import duties.

Source: AP News