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Report: US EV manufacturing faces 'extinction-level event'

The report says China uses Mexico's trade relationship with the United States to avoid high tariffs. The Institute for Energy Research says BYD will dodge a 27.5% tariff from China by building a factory in Mexico where tariffs are 2.5%.

Published: February 27, 2024 5:35pm

(The Center Square) -

An Alliance for American Manufacturing report called for tariffs to protect the U.S. electric vehicle market from an “extinction-level event” caused by Chinese competitors.

The report follows Chinese EV maker BYD, the world’s largest EV maker, releasing a $14,000 EV in February that could “demolish” domestic EVs, often $40,000 more expensive.

The report says China uses Mexico's trade relationship with the United States to avoid high tariffs. The Institute for Energy Research says BYD will dodge a 27.5% tariff from China by building a factory in Mexico where tariffs are 2.5%.

Without high tariffs, U.S. auto executives at Tesla and Stellantis have said BYD could “demolish” the domestic EV industry. AAM President Scott Paul said America’s auto industry “stands squarely in the path of devastation.”

"Fulfilling a plan that's been in the works for decades to dominate its competition in the global auto market, the Chinese Communist Party has weaponized massive state subsidies and the use of forced labor to enable Chinese companies to sell their goods at cutthroat rates around the world," Paul said in a statement. "All with the ultimate intent of annihilating auto manufacturers in America and elsewhere.”

BYD said it produced more than 3 million new energy vehicles in 2023 compared to Tesla’s 1.8 million.

Paul called on the federal government to prevent China from “trade cheating.”

The report says China reportedly spent billions of dollars to tap rare earth minerals, build factories, and use slave labor to build cheap vehicles.

The report recommends imposing exclusionary tariffs on all Chinese automobile imports to the U.S, enforcing the United States-Mexico-Canada Agreement rules of origin for all automobiles, and enforcing the Uyghur Forced Labor Prevention Act on EV metals, automotive parts, battery content and raw materials.

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