Further Action Needed to Address Threat Posed By Chinese Vehicles
WASHINGTON, D.C. — The Coalition for a Prosperous America (CPA) today welcomed the U.S. Department of Commerce’s proposed rule to ban the sale and import of connected vehicles and components that incorporate technology from the People’s Republic of China (PRC) and Russia. The proposed rule marks an important step forward in safeguarding U.S. national security and protecting Americans’ personal privacy from adversaries like China. However, there is still a significant amount of work left to fully address the threats posed by the Chinese Communist Party’s (CCP) growing overcapacity in the global automotive sector, particularly through electric vehicles (EVs).
“For years, the CCP has aggressively pursued global dominance in the automotive industry building tremendous overcapacity to dominate their home market and to displace auto manufacturing worldwide,” said Michael Stumo, CEO of CPA. “Connected vehicle technology is one way to protect manufacturing jobs in the U.S. because it offers a significant pathway for data theft and surveillance. The Commerce Department’s proposed ban on this technology is an important measure to protect our automotive sector and secure Americans’ sensitive information. However, this should be just the beginning. A more comprehensive approach is needed to fully tackle the tidal wave of Chinese vehicles entering global markets and the threats they pose to U.S. manufacturers and workers.”
Biden Administration’s Must Fully Address the Broader Threat
While CPA welcomes the Commerce Department’s proposed rule, the Biden administration must take further steps to comprehensively address the CCP’s predatory tactics within the automotive sector. CPA applauded the Biden administration and U.S. Trade Representative Katherine Tai for recently finalizing actions to maintain all existing Section 301 tariffs and increase tariffs on strategic imports from China, including electric vehicles.
However, Chinese vehicles and components continue to flood the global market and Chinese automakers are increasingly moving operations to Mexico to exploit the U.S.-Mexico-Canada Agreement (USMCA). Additionally, China’s efforts are further enabled by loopholes in the Inflation Reduction Act (IRA) that allow Chinese companies to exploit U.S. tax credits intended for domestic firms. As reported by The New York Times, a CPA economic analysis found “that Chinese manufacturers could earn up to $125 billion in tax credits under the law.”
“The Biden administration must act decisively to fully prohibit Chinese vehicles, electric or otherwise, from entering the U.S. market whether made in China, Mexico, or the U.S.,” Stumo continued. “Congress and the administration have failed to close critical loopholes in the IRA, enabling Chinese entities in the U.S. to benefit from U.S. tax credits meant for American manufacturers. This issue becomes even more pressing as Chinese automakers set up operations in Mexico to exploit the USMCA and avoid tariffs. It’s imperative that we stop American taxpayer dollars from subsidizing China’s auto manufacturers in order to protectour national and economic security.”
CPA Supports Legislative Efforts to Counter Chinese Auto Threats
CPA strongly supports legislative efforts aimed at protecting American workers and industries from China’s growing influence in the auto sector. Earlier this year, CPA praised Senator Sherrod Brown (D-OH) for introducing the Countering Adversary Reconnaissance (CAR) Act of 2024, which seeks to prohibit Chinese connected vehicles from operating near U.S. military installations. Additionally, CPA applauded Senator Josh Hawley (R-MO) for introducing the Protecting American Autoworkers from China Act, which would increase tariffs on all vehicles imported from China by 100%.
CPA strongly believes that more action is needed to strategically decouple from China by implementing additional tariffs to safeguard American jobs and critical industries and revoking China’s Most Favored Nation (MFN) status. An economic analysis from CPA found that revoking China’s MFN status would result in the creation of 2 million new American jobs, increase real household incomes by $3,647, and increase real gross domestic product (GDP) by 1.75%.
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