Thhe Alliance for American Manufacturing called on the U.S. government to halt the influx of low-cost Chinese vehicles and parts from Mexico. The advocacy group expressed concerns that the affordability of these Chinese products, backed by substantial support from the Chinese government, could spell disaster for U.S. car manufacturers.
“The introduction of cheap Chinese autos to the American market, facilitated by the North American free trade agreement, could be an extinction-level event for the U.S. auto sector,” warned the Alliance for American Manufacturing in a report released on Friday.
See also: BYD Explores Mexican EV Plant for US Export Hub
The group emphasized the need to prevent Chinese-backed companies operating in Mexico from exploiting preferential treatment under trade agreements like the U.S.-Mexico-Canada trade agreement. The report highlighted that vehicles and parts made in Mexico can benefit from a $7,500 electric vehicle tax credit, potentially exacerbating the competitive advantage of Chinese automakers.
Responding to these concerns, the Chinese embassy in Washington defended China’s auto exports, asserting that they reflect the high-quality development and strong innovation of China’s manufacturing industry. The embassy emphasized that China’s auto industry has offered cost-effective products with high quality to global markets.
The issue has gained traction following reports that BYD, a Chinese automaker renowned for its affordable models and diverse lineup, plans to establish an electric vehicle factory in Mexico. This development comes as BYD recently surpassed Tesla as the world’s leading EV maker by sales.
In response to these developments, a bipartisan group of U.S. lawmakers has called on the Biden administration to raise tariffs on Chinese-made vehicles and explore strategies to prevent Chinese companies from exporting vehicles to the U.S. via Mexico. The lawmakers have urged the U.S. Trade Representative to consider increasing the current 27.5% tariff on Chinese vehicles, emphasizing the need to address the potential influx of Chinese vehicles through strategic operations outside China.
See also: Tesla Gigafactory Mexico’s Groundbreaking Expected in March, Pending Permit Extension
John Bozzella, CEO of the Alliance for Automotive Innovation, has warned that proposed U.S. environmental regulations could further bolster China’s position in America’s electric vehicle battery supply chain and automotive market.
To counter China’s growing influence in the U.S. EV market, the U.S. Treasury issued guidelines in December for the $7,500 EV tax credit aimed at reducing dependence on Chinese EV components.
