WASHINGTON, D.C. – Chinese auto manufacturers – of both the gas and electric-powered varieties – have been attempting to make headway into the American market for some time, but have found themselves impeded by bipartisan efforts in Washington to impose heavy taxes upon these imports, in addition to finding themselves under heavy scrutiny over potential national security risks associated with the tech embedded in these vehicles.
That being said, reports indicate that Chinese automakers such as BYD may be attempting to take advantage of a loophole in American legislation by making cars in Mexico that would be subsequently imported into United States.
The loophole in question – which Senators Josh Hawley (R-Mo.) and Marco Rubio (R-Fla.) are currently attempting to plug with a newly-proposed bill – involves the fact that all products manufactured in Mexico and imported to the U.S. that are compliant with the United States-Mexico-Canada Agreement (USMCA) are assessed zero tariffs.
The reasoning behind this clandestine approach to get their automotive product into the U.S. is to circumvent the 25 percent tariff imposed upon Chinese vehicle imports by the Trump Administration in 2018, done so in response to what was alleged to be Beijing’s aggressive trade practices violating global trade rules.
In addition to their attempted manipulation of USMCA to their advantage, Chinese auto brands may also be utilizing another “sneaky” trick to enter the U.S. market- a practice known as “contract manufacturing,” where car companies essentially outsource the manufacturing of their vehicles to a plant located in another country where they wish to gain a foothold. The work these outside companies could potentially do for Chinese automakers could range from simple pre-made part assembly all the way to designing, engineering, and full manufacturing of a new vehicle model.
Pasi Rannus, the CEO of Valmet Automotive, a company in Finland that takes on contract manufacturing work, says that he’s already been approached by Chinese automakers to build vehicles for the European market, and maintains that it’s only a matter of time before this starts happening in the U.S. as well.
They are definitely coming,” Rannus said. “You need to be aware of that. I think the first wave of Chinese automakers utilizing contract manufacturers will take place in Europe. I think the U.S. could be pretty close in the next wave, but it is a bit more protected with the [Inflation Reduction Act].”
Christopher Boyle is an investigative journalist, videographer, reporter and writer for SEARCHEN NETWORKS® as well as other independent news and media organizations in the United States. Christopher works on a wide variety of topics and fields, has been featured in print and online in a variety of publications, from local to national, and helps keep a keen-eye on what’s happening in the automotive world for Auto Buyers Market.