Electric Car Trade War: US Government Asked To Block Chinese Car Imports From Mexico

On February 1, BYD officially served as UEFA EURO 2024 partner. (Doc. BYD)

JAKARTA - The automotive giant from China, BYD, is exploring the establishment of an electric vehicle factory in Mexico, with the aim of increasing supply chain efficiency and reducing export costs to the North American market.

It turns out that BYD's plans and also the hectic activities of a number of other Chinese manufacturers in Mexico from the beginning of the year have disturbed automotive industry players in the United States and have again heated up the issue of trade warfare related to electric cars.

The United States (US) manufacturing advocacy group, Alliance for American Manufacturing, reported by Reuters on February 25, urged the US government to block imports of cheap Chinese cars and components manufactured in Mexico. They fear this could threaten the survival of US automakers.

"The entry of cheap Chinese cars supported by the power and funding of the Chinese government into the American market could be an devastating event for the US automotive sector," said a report released by Alliance for American Manufacturing.

They argued that the US should prevent cars and components made by Chinese factories in Mexico from benefiting from the North American (USMCA) free trade agreement.

"The trading backdoor for Chinese car imports must be closed before causing mass factory closures and job loss in the United States," the report said.

The presence of BYD in Mexico is feared to further flood the US market with cheaper Chinese electric cars.

Meanwhile, the Chinese government through its embassy in Washington stated that their car exports reflect the development of high quality and strong innovation of China's manufacturing industry or that they are capable of providing high-quality cost-effective products to the world.

On the other hand, a number of lawmakers have also urged the Biden government to raise import duty rates for Chinese-made vehicles and asked to find ways to prevent Chinese companies from exporting to the US via Mexico.

They also asked Biden to increase the tariff by 27.5 percent if that happens for Chinese vehicles and prepare for a wave of Chinese vehicles to be exported from other US trading partner countries, such as Mexico.

The next US government decision will determine whether this trade war will worsen or a mutually beneficial solution can be found.