US rejects Tesla bid for tariff exemption for Autopilot ‘brain’

Company also has separate pending exclusion requests for duties

WASHINGTON: US trade officials rejected Tesla Inc’s bid for relief from President Donald Trump’s 25% tariffs on the Chinese-made Autopilot “brain” of its Model 3 and other electric vehicles, one of more than 1,000 product denials linked to China’s industrial development plans.

According to documents filed by the US Trade Representative’s office (USTR) and reviewed by Reuters, exclusion requests from Tesla and others for Chinese-made products from aircraft parts to biotechnology instruments were denied because they were deemed “strategically important” to the “Made in China 2025” program.

Tesla declined to comment.

The company has separate pending tariff exclusion requests for duties on the Chinese-made Model 3 Center Screen and for the Model 3 Car Computer before USTR.

Tesla said in a securities filing on Monday “Our costs for producing our vehicles in the US have also been affected by import duties on certain components sourced from China.”

The denials 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 US intellectual property.

Made in China 2025, a program aimed at growing China’s prowess in 10 strategic industries dominated by the United States, is at the heart of trade negotiations and US demands for sweeping changes to China’s policies. Those industries include new energy and autonomous vehicles, aerospace, semiconductors, biopharmaceuticals, robotics and artificial intelligence.



Economic harm

Tesla first made its request to exclude its 3.0 Autopilot electronic control unit in July 2018, which it called the “brain of the vehicle” when the Palo Alto, California-based automaker warned that “increased tariffs on this particular part cause economic harm to Tesla, through the increase of costs and impact to profitability.”

In a March 15 letter, USTR General Counsel Stephen Vaughn said the agency was denying Tesla’s request because it “concerns a product strategically important or related to ‘Made in China 2025 or other Chinese industrial programs.” USTR issued a separate letter also denying a request for the earlier 2.5 version of the Autopilot ECU.  

Published in The Express Tribune, May 5^th, 2019.

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