On April 9, 2024, nine House Democrats wrote US Trade Representative Katherine Tai, urging "additional action of the imminent danger posed by the expansion of Chinese automotive exports." The nine House Democrats include five representatives for Michigan, which is home to Detroit, a city center to the US automotive industry. The letter asserts that additional measures must be taken to prevent "the influx of low-cost Chinese vehicles backed by the" Chinese Communist Party ("CCP"), which the authors assert threaten the US automotive industry. Back in January, Trade Representative Tai responded to the House Select Committee on the CCP's concerns regarding the practices of China in the electric vehicle (EV) sector and called for additional steps to counter China's effort to dominate the EV supply chain.
The April 9 letter cites as a worrying trend the "significant investments" the CCP has made in recent years "to support its automotive industry," including subsidies, which has resulted in "an overabundance of Chinese exports." The letter acknowledges that there are US trade barriers in place, but despite such measures "Chinese automakers are now seeking entry into [the U.S.] market." The letter expresses concern that the influx of Chinese automotives will "undermine the competitiveness" of domestic US auto manufacturers, which could result in the loss of jobs for "millions of American workers."
The nine House Democrats emphasized that their concern was not limited to economic threats posed by China's overcapacity and potential future dumping in the US market. They assert that "CCP-backed initiatives . . . aimed at achieving global market dominance" also implicate national security concerns. The letter asserts the "importance of maintaining American leadership in [EV] manufacturing," citing the potential threat posed by a vehicle supply chain that is "highly connected" with "foreign adversari[es]." "Foreign adversarial threat" in the automotive supply chain has been a focus of the Biden Administration, as evidenced by the March 1, 2024, Advanced Notice of Proposed Rulemaking seeking public comments on potential regulation of information systems that are integral to connected vehicles, as discussed in our previous newsletter.
To address these threats, the nine House Democrats urged the Biden Administration to take the following steps to block Chinese automobiles from the US market: "increase tariffs on Chinese automobiles, expedite the review of existing Section 301 tariffs on Chinese goods, and continue strengthening enforcement of our trade agreements to ensure automobiles and parts produced by Chinese manufacturers are not repeating the benefits." The nine House Democrats asserted that such steps will "safeguard domestic automotive manufacturing," protect the American economy, and "preserve national security interests."
The letter concludes by stating that the nine signatories are ready to work with the Administration to "combat the threats posed by Chinese efforts to infiltrate [the U.S. market]" and "address the threat posed by CCP-subsidies imports into the U.S. automotive sector."
The April 9 letter reflects the continued bipartisan interest in using existing tools and identifying additional methods to secure the US automotive industry, particularly as it concerns EVs and the related supply chain. For example, the mentioning of "parts produced by Chinese manufacturers" in the context of US trade agreements is an area where non-traditional rules might develop over time to counter the perceived supply chain threat related to China. Interested parties should monitor related development closely to avoid damaging supply chain shocks.
Footnote
1. wto2024_0387a.pdf (insidetrade.com). [NOTE: could not find public version of this letter.]
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