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


Treasury Secretary Janet Yellen, left, United States Trade Representative Katherine Tai, second from left, and Acting Labor Secretary Julie Su, third from left, listen as President Joe Biden speaks in the Rose Garden of the White House in Washington, Tuesday, May 14, 2024, announcing plans to impose major new tariffs on electric vehicles, semiconductors, solar equipment and medical supplies imported from China. 

(AP Photo/Susan Walsh)

JOSH BOAK
Updated Tue, May 14, 2024

WASHINGTON (AP) — The Biden administration is suggesting the possibility that additional penalties could be put in place if the Chinese makers of electric vehicles try to move their production to Mexico to avoid newly announced import taxes.

President Joe Biden on Tuesday directed the office of the U.S. Trade Representative to impose a total tariff in excess of 102% on Chinese EVs, as well as directing new tariffs on other products including steel, aluminum, computer chips and solar cells.

But Chinese EV company BYD has previously indicated that it was looking at factory sites in Mexico for the Mexican market. That raises the possibility that Chinese companies could use Mexico as a backdoor into the U.S. market.

Asked at the White House news briefing on Tuesday about new tariffs, U.S. Trade Representative Katherine Tai said, “Stay tuned.”

Tai said any penalties if China should follow through on factories would require a “separate pathway” from the Section 301 review of the Trade Act of 1974. That four-year review led to the tariffs on $18 billion worth of Chinese imports announced on Tuesday.

Tai said that China using Mexico as a workaround was “something we are talking to our industry, our workers and our partners about.”

The U.S. Trade Representative's office after Tai's remarks said that it could provisions within the U.S.-Mexico-Canada Agreement to address unfair subsidies and efforts to avoid import duties.