Daily Management Review

Suit Against US Govt. Over Tariffs On Car Parts Filed By Tesla, Volvo, Ford And Mercedes


Suit Against US Govt. Over Tariffs On Car Parts Filed By Tesla, Volvo, Ford And Mercedes
A number of major car manufacturers - Tesla, Volvo, Ford and Mercedes-Benz, filed court cases against the United States President Donald Trump’s administration against the tariffs. Tesla CEO Elon Musk called the tariffs imposed on certain car parts imported from China as “unlawful”.
The target of the lawsuits that were filed in New York this week was the 25 per cent import tariff that the Trump administration had imposed through the US trade representative on a host of products from China which included spare parts of vehicle such as terminals.
The levies were “arbitrary, capricious, and an abuse of discretion”, said Tesla’s filing to the Court of International Trade.
The US trade representative, Robert Lighthizer has been named as a defendant in the law suit. Last year an application from Tesla to Lighthizer’s department requesting exemption from the import tariffs for on computer and display screens from China was turned down,. The company uses these parts for its Model 3 electric car. Tesla would be harmed if it had to pay higher costs for components, said the company that was funded by Elon Musk.
According to the filing, Tesla has sought a cancellation of the tariffs together with a “refund, with interest” of duties that the company has already paid.
The Trump administration was accused of “prosecution of an unprecedented, unbounded, and unlimited trade war impacting over $500bn in imports from the People’s Republic of China,” by Mercedes in its filing. The company argued that US law “did not confer authority on defendants to litigate a vast trade war for however long, and by whatever means, they choose”.
The tariffs were imposed as a part of the ongoing trade war between the US and China with both sides imposing reciprocating tariffs on each other’s goods. The US had argued that the import duties would be able to wean its manufacturers off Chinese technology and help to reduce the huge trade deficit that the US has with China. 
Since Trump took office in 2017, the two largest economies of the world have been engaged in months of trade conflict. Washington has maintained the additional tariffs of 25 per cent on the equivalent of $250bn in Chinese goods despite a “phase one” trade deal being signed between the parties earlier this year which provided a partial truce in the trade war.
The aim of the US is to reform Chinese commerce practices it considers “unfair” in addition to reducing its trade deficit with China, while Beijing has also retaliated with its own tariffs on US goods.
The total trade deficit of the US in July grew by almost 11 per cent to $63.6bn while that with China increasing to $28.3bn, according to data released by the US commerce department.
For Tesla China is a critical growth market because of the ambitious plans of the country to reduce CO2 emissions and use of fossil fuel for vehicles. China is also the largest auto market of the world and responsible for growth of many global car makers.