New Legislation Proposed by Sen. Hawley Seeks to Increase Tariffs on Vehicles Imported from China
In a move aimed at protecting American workers and reducing China’s influence, Senator Josh Hawley has introduced new legislation that would significantly increase tariffs on vehicle imports from China. The bill, called the Protecting American Automakers from China Act, proposes raising the base tariff rate for auto imports from China from the current 2.5 percent to a staggering 100 percent. This would result in a total tariff of 125 percent on all imported Chinese vehicles, up from the current 27.5 percent.
The proposed tariffs would also apply to vehicles manufactured by Chinese companies, regardless of where they are made. This means that Chinese automakers would not be able to use other nations, such as Mexico, as a “backdoor” to avoid the new tariffs. Senator Hawley argues that this is necessary to protect American autoworkers from the threat posed by China and to bring jobs back to American soil.
China’s growing dominance in the global auto industry is a cause for concern for many. In 2023, China surpassed Japan as the world’s largest auto exporter. Chinese electric carmaker BYD even outsold Tesla in electric vehicle (EV) sales in the final quarter of last year. To further expand its presence, BYD is now considering setting up a factory in Mexico. However, this move has raised national security concerns, with experts warning that it could be an end-run around U.S. tariffs on China.
Anders Corr, a China expert, argues that BYD’s plan for a plant in Mexico poses a threat to U.S. national security. The tariffs that BYD currently pays on cars shipped from China would drop significantly if its vehicles were manufactured in Mexico. Corr believes that U.S. politicians must do more to prevent this potential influx of Chinese automobiles, which could have dire consequences for the U.S. auto industry.
This sentiment is echoed by the Alliance for American Manufacturing, a U.S. manufacturing advocacy group. The group recently published a report warning that cheap Chinese automobiles and parts pose a significant threat to the U.S. auto industry. They recommend imposing exclusionary tariffs on all Chinese automobile imports to the United States, targeting both EVs and internal combustion engine vehicles. They also suggest excluding automobiles and component parts manufactured by companies headquartered in non-market economies, such as China, from gaining preferential treatment under trade agreements.
These concerns are not new. Last year, four lawmakers from the House Select Committee on the Chinese Communist Party sent a letter to U.S. Trade Representative Katherine Tai, expressing concerns about China’s potential plan to flood the global markets with automobiles, particularly electric vehicles. They urged Tai to consider conducting a new Section 301 investigation into China’s practices and strengthen the current rules of origin in trade agreements to prevent China from gaining a backdoor to the U.S. market.
The Biden administration is aware of these issues and has promised to review China’s non-market policies and practices in its automotive industry, as well as the current tariff levels.
The proposed legislation by Senator Hawley reflects growing concerns about China’s influence in the global auto industry and its potential impact on American workers. As the U.S. government reviews its trade policies with China, it remains to be seen how these measures will play out and whether they will effectively protect American automakers and workers in the long run.
