US eyes possible penalties if production of China EVs moves to Mexico

U.S. Trade Representative Katherine Tai speaks with reporters in the James Brady Press Briefing Room at the White House, Tuesday, May 14, 2024, in Washington. (AP Photo/Alex Brandon)

WASHINGTON — 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 percent on Chinese EVs, as well as directing new tariffs on other products including steel, aluminum, computer chips, and solar cells.

READ: Biden hikes tariffs on Chinese EVs, solar cells, steel, aluminum

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.”

READ: BYD overtakes Tesla as world’s top EV maker

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 take several actions other than tariffs, noting that there are provisions within the U.S.-Mexico-Canada Agreement to address unfair subsidies and efforts to avoid import duties.