- Tesla wants a refund on tariffs paid for Chinese imports.
- The company says the current duties are illegal.
- The US – China trade war is hurting some automakers.
Tesla is among a list of companies that are suing the US government over increased taxes that have affected imported spare parts from China. According to legal documents filed by the company, the tariffs are “arbitrary, capricious, and an abuse of discretion.”
Ford, Volvo, and Mercedes-Benz have similarly petitioned the Trump administration because of the hiked taxes.
The string of litigations that were filed earlier this week target the 25 percent tariff slapped on Chinese imports as part of the ongoing trade war with the East Asian country.
The Tesla lawsuit enjoins Robert Lighthizer, the US Trade Representative. His office reportedly turned down a request by Tesla to be exempted from paying tariffs on vital parts that had to be sourced from China.
Tesla claimed that the higher taxes would significantly add to its production costs.
The company demands the cancellation of all duties paid plus interest.
The Ongoing US – China Trade War
The Trump administration took a hostile stance against the trade deficit with China in 2018. It accused the East Asian nation of taking advantage of the US market by ramping up competition.
The US is China’s main trading partner. At the time, China enjoyed a $419 trade deficit, which accelerated its rise to become a leading manufacturing powerhouse.
The Impact of the Trade War
In a nutshell, the China – US trade war has essentially been unable to solve the economic concerns initially raised by the Trump administration. Its negative effects have gone beyond economics and lessened cooperation between the two nations. It has additionally increased China’s resolve to advance its interests in foreign markets.
The US government instigated the trade war in 2018 to pressure China into abandoning unfair trade practices. They included forced limitations to market access. US companies operating in the country were also pushed to make vital technological transfers under duress.
According to US President Donald Trump’s plan, reducing the trade deficit with China using tariffs would help to bring manufacturing jobs back home. Subsequently, hiked taxes were announced that would impact $550 billion of imported Chinese products. China hit back with tariffs affecting over $185 billion of imported US goods.
WTO Says US Tariffs are Excessive
Earlier this month, The World Trade Organization said that the United States had contravened international guidelines by imposing billion-dollar tariffs on China.
The World Trade Organization’s three-member panel underlined that the US government had imposed tariffs that were above the maximum rates allowed by the organization. It said that Washington had declined to provide sufficient evidence to justify its over-the-top duties.
The proclamation prompted the White House to respond. According to a statement issued by US Trade Representative Robert Lighthizer, “This panel report confirms what the Trump administration has been saying for four years: the WTO is completely inadequate to stop China’s harmful technology practices.”