By David Shepardson
WASHINGTON (Reuters) -Republican U.S. Senator Josh Hawley introduced legislation Wednesday to hike tariffs on Chinese vehicle imports as concerns mounted about the potential competitive impact on U.S. car companies.
Hawley said President Joe Biden should take steps to protect U.S. auto workers "from the existential threat posed by China."
A bipartisan group of lawmakers in November urged U.S. Trade Representative Katherine Tai to boost tariffs on Chinese vehicles, saying she should plan "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)."
Hawley's bill would hike the base tariff rate to 100% from 2.5% currently. This would mean a total tariff of 125% on all imported Chinese autos from 27.5% currently. It also seeks to apply the 100% tariff hike to vehicles assembled in Mexico by Chinese-based automakers.
Auto industry officials told Reuters Biden is considering hiking tariffs on Chinese EVs. "China is determined to dominate the electric-vehicle market by using unfair trade practices, but I will not let them," Biden told autoworkers in November.
Tai said last month the Biden administration is closely reviewing "China's non-market policies and practices in its automotive industry" and reviewing current tariff levels.
On Friday, a U.S. manufacturing advocacy group urged Biden to block low-cost Chinese autos and parts from Mexico.
"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.
While many Chinese automakers are state backed, they have worked to improve vehicles and are moving faster than other regions" in high-tech areas like dashboard displays and tests for autonomous driving, said S&P Global (NYSE:SPGI) Mobility analyst Stephanie Brinley.
Republican Donald Trump, who is seeking a second term as president in November, has threatened to impose hefty new tariffs on Chinese vehicle imports after hiking tariffs by 25% when he was president.
The Chinese embassy in Washington said China's automobile exports "reflect the high-quality development and strong innovation of China’s manufacturing industry."
The issue has received new interest after reports China's BYD plans to set up an EV factory in Mexico. BYD, known for cheaper models, recently overtook its biggest rival, Tesla (NASDAQ:TSLA), to become the world's top EV maker by sales.