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Electric car manufacturer Tesla has filed a lawsuit against U.S. President Donald Trump’s administration, aiming to end what it calls “unlawful” tariffs imposed on certain parts imported from China.
American electric car producer Tesla Inc (NASDAQ: TSLA) said it decided to sue the United States government and its Trade Representative Robert Lighthizer due to the decision of the U.S. President Donald Trump administration to impose tariffs on items Tesla imports from China.
Meanwhile, yesterday, TSLA stock lost over 10% of its value to trade at $380.36. After hours it was another 3% down.
Tesla said it expects the court to acknowledge two arrays of Trump administration tariffs to get rid of, and compensate Tesla the tariffs it paid with interest, as per the lawsuit that was filed in the U.S. Court of International Trade.
The specific tariffs that we are talking about here are infamously known as List 3 and List 4. List 3 became effective back in 2018 and currently places 25% duties on $200 billion of imported goods from China. List 4 came to effect in 2019 and currently is made of a 7.5% tariff on $120 billion of Chinese imports. Both lists accommodate numerous specific items, going from raw materials to electronic components. The lawsuit did not show the exact quantity of items for which Tesla paid tariffs on, nor the amount that was paid.
Tesla’s lawyers said in Wednesday’s filing, which also named the acting commissioner of U.S. Customs and Border Protection, Mark Morgan, as a defendant:
“The U.S. trade representative’s “imposition of List 3 and List 4 duties was arbitrary and capricious because USTR did not provide meaningful opportunity to comment, failed to consider relevant factors when making its decision, and failed to draw a rational connection between the facts found and the choices made.”
Tariffs in the U.S.
Companies got the possibility to ask for a postponement on certain items as part of the tariff process. Tesla applied for postponement in 2019 on artificial graphite, silicon oxide and door ring tailor welded blanks, and all three were approved but it said that there is an expiration date in August 2020.
In 2019, U.S. trade officials dropped Tesla’s appeal for aid on 25% tariffs on the Model 3′s car computer and screen, complaining that the parts use technologies of the strategic importance to Chinese national security programs. Tesla then stated that the afflicted parts are the “brain” of its autopilot system.
Tesla confirmed back then that its costs for producing vehicles in the U.S. “have been affected by import duties on certain components sourced from China.”
All of these banns jus show how systematic, and symptomatic, approach the Trump administration has regarding Chinese exertions to construct high-technology industries for which Washington states in has benefited from theft and forced transfer of U.S. intellectual property.
There is a program dubbed ‘Made in China 2025’, and it is aiming at widening China’s aptitude in 10 strategic industries that were previously had the United States as a leader. This “battle” stands in the middle of trade negotiations where the U.S. demands immediate changes to China’s policies.
Those industries include new energy and autonomous vehicles, aerospace, semiconductors, biopharmaceuticals, robotics and artificial intelligence.
Tesla tried to explain, however, that it cannot find a producer in the United States for the mentioned parts, claiming that “choosing any other supplier would have delayed the Model 3 program by 18 months with clean room setup, line validation, and staff training.”
Tesla also claimed it “refines” the Autopilot ECU with the latest Firmware made in California when it comes from China by supplier Quanta Shanghai.