The U.S. Is Denying Tesla Tariff Exemptions for China-Made Model 3 Parts
The U.S. government has rejected requests from Tesla to make certain China-built Model 3 parts exempt from tariffs.
The 25 percent tariffs are applied to the Model 3's touchscreen and computer, and Tesla says they cause "economic harm" to the company.
Last month, the U.S. government also denied exemption requests for Tesla's Autopilot computer.
The U.S. Trade Representative's Office has denied requests from Tesla that would provide exemptions for Model 3 components that are built in China and subject to 25 percent tariffs, Reuters reports. The parts in question are the Model 3's giant touchscreen and its requisite computer.
Both requests were rejected because the parts are "a product strategically important or related to 'Made in China 2025' or other industrial programs," according to letters that were seen by Reuters. Made in China 2025 is a strategic plan implemented by the Chinese government with the aim to make China a new leader in global manufacturing.
Tesla had said that tariffs on the Model 3's computer cause "economic harm to Tesla through the increase of costs and impact to profitability." In one of the exemption requests, the company said choosing another supplier would have delayed the Model 3 by 18 months. Last month, the U.S. government also denied the automaker's request for tariff exemptions on the Tesla Autopilot system's "brain" computer.
Tesla isn't the only automaker that is affected by tariffs on cars and parts coming from China. At the same time that it rejected Tesla's request, the U.S. government also rejected exemption requests from General Motors and Volvo, both of which build cars in China for export to other markets including the United States. Tariffs on goods produced in Mexico are another economic issue-albeit one that currently appears to be a moving target-affecting the automotive industry, with an enormous number of cars and car parts being exported to the U.S. every year.
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