US senator proposes barring Chinese OEMs from using other countries for production to evade tariffs

Republican senator in the United States, Marco Rubio has proposed barring Chinese manufacturers from evading US tariffs through the setting up of factories in other, ‘third countries’ such as Mexico, Vietnam or Malaysia, Reuters has reported.

Rubio accused Chinese manufacturers of moving production to other countries in order to face lower tariffs in the US, and said that doing so allowed them “to evade tariffs and flood the US market with cheap goods.”

In March, the Republican senator proposed legislation to extend higher tariffs to vehicles produced by Chinese manufacturers in other countries such as Mexico, echoed by former United States president and current presidential candidate Donald Trump who threatened to impose a 100% tariff on cars, including EVs, from Chinese brands.

An example of the ‘third country’ move that enables a manufacturer to potentially get around tariffs on China-made EVs is BYD, which opened a plant in Rayong, Thailand to expand its manufacturing footprint beyond its native China.

The Chinese brand announced at the end of last year that it will be opening its first European EV factory in Szeged, Hungary, as part of its plan to open two EV plants in Europe.

In May, US president Joe Biden announced new tariffs on China-made goods, including EVs which saw duties quadrupled from 25% to 100%.

These tariffs were locked in by the US trade representative last week, according to a separate Reuters report, and includes a new 25% tariff on lithium-ion batteries, minerals and components. Those for EVs will take effect on September 27, while those for all other devices will take effect on January 1, 2026.

North of the border, Canada has also announced earlier this month that it will impose a 100% tariff on electric vehicles made in China, a move that has also been mirrored by the European Union, which will be applying additional tariffs of up to 38.1% on EVs made in China and exported to the EU.

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