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UPDATE 1-U.S. denies Tesla tariff relief request for Chinese-made Model 3 'brain'

Reuters | Washington DC | Updated: 13-06-2019 21:23 IST | Created: 13-06-2019 21:16 IST
UPDATE 1-U.S. denies Tesla tariff relief request for Chinese-made Model 3 'brain'
Image Credit: Reuters

The Trump administration has denied requests to exempt Tesla Inc's Model 3 from 25% tariffs on its Chinese-made car computer and centre screen, according to letters seen by Reuters. The U.S. Trade Representative's Office denied both requests in May 29 letters, saying they both concern "a product strategically important or related to 'Made in China 2025' or other Chinese industrial programs."

The California-based electric vehicle manufacturer had warned that increased tariffs on the car computer it dubbed the "brains" of the Model 3 causes "economic harm to Tesla, through the increase of costs and impact to profitability." Tesla had also urged the office to approve a request by its supplier SAS Automotive USA Inc, builder of the centre display screen for the Model 3.

Tesla did not immediately respond to a request for comment. Shares of Tesla dipped from earlier highs after Reuters first reported the decisions but were still up more than 1% at $212.75. China's "Made in China 2025" strategy is focused on 10 strategic advanced manufacturing industries including new energy vehicles, where it aims to be a global leader.

Reuters reported previously that U.S. trade officials also rejected on May 29 separate requests from General Motors Co and Chinese-owned Volvo Cars for an exemption to a 25% U.S. tariff on their Chinese-made sport utility vehicles. Both GM and Volvo Cars, a unit of China's Geely, had not raised the sticker price to account for tariffs, which came into play last July.

GM's Buick Envision, a midsize SUV with a starting price of about $35,000, has become a target for U.S. critics of Chinese-made goods, including leaders of the United Auto Workers union and members in key political swing states such as Michigan and Ohio.


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