"The introduction of cheap Chinese autos - which are so inexpensive because they are backed with the power and funding of the Chinese government - to the American market could end up being an extinction-level event for the U.S. auto sector," the Alliance for American Manufacturing said in a report.
The group argues the United States should work to prevent
automobiles and parts manufactured in Mexico by companies headquartered in
China from benefiting from a North American free trade agreement. "The
commercial backdoor left open to Chinese auto imports should be shut before it
causes mass plant closures and job losses in the United States," the
report said.
Vehicles and parts produced in Mexico can qualify for
preferential treatment under the U.S.-Mexico-Canada trade agreement as well as
qualifying for a $7,500 electric vehicle (EV) tax credit, the report noted.
The Chinese embassy in Washington said in response that
China's automobile exports "reflect the high-quality development and
strong innovation of China’s manufacturing industry... The leapfrog development
of China’s auto industry has provided cost-effective products with high quality
to the world."
The issue has received new interest after news reports that
China's BYD plans to set up an EV factory in Mexico. BYD, known for its cheaper
models and a more varied lineup, recently overtook its biggest rival, Tesla, to
become the world's top EV maker by sales.
Tesla announced plans almost a year ago to build a factory
in the northern Mexican state of Nuevo Leon. In October, Mexico said a Chinese
Tesla supplier and a Chinese technology company would invest nearly a billion
dollars in the state.
A bipartisan group of U.S. lawmakers has urged the Biden
administration to hike tariffs on Chinese-made vehicles and investigate ways to
prevent Chinese companies from exporting to the United States from Mexico.
A group of lawmakers urged U.S. Trade Representative
Katherine Tai to boost the 27.5% tariff on Chinese vehicles and said her office
"must also be prepared to address the coming wave of (Chinese) vehicles
that will be exported from our other trading partners, such as Mexico, as
(Chinese) automakers look to strategically establish operations outside of
(China)."
Alliance for Automotive Innovation CEO John Bozzella has
said that proposed U.S. environmental regulations could let China gain "a
stronger foothold in America’s electric vehicle battery supply chain and
eventually our automotive market."
The U.S. Treasury issued guidelines in December on the
$7,500 EV tax credit aimed at weaning the U.S. EV supply chain away from China.