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UPDATE 2-U.S. denies Tesla, Uber 25% tariff relief on components, e-bikes

Reuters | Washington DC | Updated: 13-06-2019 22:56 IST | Created: 13-06-2019 22:41 IST
UPDATE 2-U.S. denies Tesla, Uber 25% tariff relief on components, e-bikes
Image Credit: Twitter (@Reuters)

The Trump administration is expanding its efforts to block the use of Chinese technology in advanced vehicles, denying additional requests by Tesla Inc for tariff relief on key components of its electric vehicles, and rejecting ride hailing company Uber's petition to waive tariffs on electric scooters. The office of the U.S. Trade Representative (USTR) rejected requests to exempt the Model 3 car computer and center screen in May 29 letters, saying they both concern "a product strategically important or related to 'Made in China 2025,' or other Chinese industrial programs."

In May, Reuters reported USTR had rejected a separate request by Tesla to exempt the Autopilot "brain" from the tariffs. Separately, the USTR denied Uber Technologies Inc's request on May 29 for an exemption from the 25% tariff for its Chinese-made electric bikes that customers rent through its app. Uber declined to comment.

The denials of relief for more than 1,000 products to date among $50 billion in imports hit last year with U.s. tariffs illustrate a systematic approach by the Trump administration to thwart China's efforts to develop high-technology industries that Washington alleges benefited from theft and forced transfer of U.S. intellectual property. Tesla had warned that increased tariffs on the car computer it has 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 center display screen for the Model 3. The 17-inch (43-cm) cockpit touchscreen control panel displays navigation, media, audio, climate control, energy display and all in-cabin controls. Tesla did not immediately respond to a request for comment, but said in an April 29 securities filing that its "costs for producing our vehicles in the U.S. have also been affected by import duties on certain components sourced from China."

Shares of Tesla were off earlier highs after Reuters first reported the decisions, but were still up 1.7% at $212.82 in early afternoon trading on the Nasdaq on Thursday. Tesla said in its tariff exemption request that "choosing any other supplier would have delayed the (Model 3) program by 18 months with clean room setup, line validation and staff training."

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 sport utility vehicles made in China.

Both GM and Volvo Cars, a unit of 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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