Tesla Seeks Tariff Exemption On Model 3 Computer From China

JAN 5 2019 BY MARK KANE 44

The tariff on brains is too high.

Import tariffs raised by the U.S. and China in August heavily affect many businesses.

One of the most recent signals from the EV industry is Tesla’s request for exemption of the Model 3’s computer “the brain of the vehicle” produced in China, from the 25% tariff.

According to Tesla, the high tariff threatens the company’s bottom line and there is no easy way to switch to another supplier. The supplier itself was not disclosed though.

“In a redacted request posted on a government website by the USTR on Dec. 17, Tesla did not identify the supplier of the computer. But it said it had been unable to find another manufacturer “with the required specifications, at the volume requested and under the timelines necessary for Tesla’s continued growth.”

Tesla, which called the Model 3’s computer “the brain of the vehicle,” added that “choosing any other supplier would have delayed the (Model 3) program by 18 months with clean room setup, line validation, and staff training.”

Using a new supplier “substantially increases the risk of poor part quality that could lead overall vehicle quality issues that would impact the safety of our vehicles and the consumer acceptance of the final product,” Tesla added in its request for tariff relief.”

Tesla is not the only one who seeks exemptions. GM, Nissan, Fiat and Uber are just a few other examples mentioned in the article.

Source: Reuters

Lead Image Credit: Kartik (@itskrtk), 2

Categories: China, Tesla

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44 Comments on "Tesla Seeks Tariff Exemption On Model 3 Computer From China"

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I don’t worry about Tesla. This is typical modern capitalism. The tariffs will hurt small businesses, but big ones will get exceptions.

If you were right the stock markets might look a little different.

Fact is the orange one did the only thing he really knows: break the china.

China has had an unfair advantage for too long. I’m not a huge fan of Trump but it’s about damn time someone in Washington stands up to China, their intellectual property theft, and their own protectionist policies (like automakers needing to partner with local Chinese firms to avoid steep tariffs).

Exactly

I absolutely loath the creature in the White House, but he does seem to be the only one that has tried to address the ridiculous trade situation the US is in that is slowly eroding the strength of the country. Too bad he has no idea what he’s doing and knows nothing about international trade, but at least he’s doing something whereas every other administration since Nixon has just been corporate lap dogs that did all they could to export American jobs and American capabilities all so corporations could get crazy rich.

Yeah, he is taxing Americans to punish China. He was bragging the other day about the billions of dollars stolen from Americans in the form of Trump tarrifs/taxes.

I agree. If the product is made elsewhere that is roughly similar in cost, tariff on Chinese product would be punishing China. But if there’s no comparable alternative and people must buy post-tariff product, it’s simply another tax on the buyers.

Look at it this way. The US has an enormous debt load due to poor management. The current administration is just adding to it. This is a way to defer some of the cost of the stupid tax give away to the rich he and the Republicans came up with.

Consumers buy products and if quality is equal they always buy the less expensive product. So companies go to where there’s a good supply of workers available for low wages.
It’s surprising that we have to go 8,000 miles away for it. Mexico and Central America have a large supply of low cost workers yet American companies don’t build there.
There problem is the same as in the US. Where for some reason even though much of the factories have a lot of automation, American companies don’t build there.
Yet a Chinese company like Foxconn will build a factory to make Apple phones in Wisconsin.

Do Not Read Between The Lines

American companies certainly do build in Mexico. The automotive industry is an example.
Foxconn have been shopping around for incentives. I don’t know if they’ll ever build anything.

So your solution is to tax American consumers in the form of tarrifs to punish China? Sounds kind of insane to me. Can you remind me the last time the USA won a trade war through tarrifs?

Lots of people here support a gas tax to force people to buy less gas because it’s bad for us. Well, consider this a cheap crap from China tax to perhaps force us to buy less crap from China that is also not good for us.

Are you aware of the US tariff on sugar which protects the large Florida plantations destroying the Everglades? 25% for “brains” is nothing.

To maintain this minimum price, the government restricts low-
priced imports by establishing a quota that limits the amount of sugar Americans can import at relatively low tariff rates. … Based on 2013 world sugar prices, the average above-quota tariff rate was 88 percent for raw sugar and 73 percent for refined sugar.
https://www.heritage.org/trade/report/us-trade-policy-gouges-american-sugar-consumers

I suspect this is a reason for soft-drink manufacturers using so much low fructose corn syrup.

One big issue though, is trump should be standing for all west against china. He should have required China’s tariff drop on autos to be for all nations exporting into china. That would have more impact with WTO.

Working with our Allies,TPP, and WTO would have been the smart way of doing this. But the only time Trump is the smartest person in a room is when he’s alone.

Are you sure that he is then? There might be a mouse in the room.

That’s because of the general downward trend we will see, small businesses going bust also means unemployment and the unemployed, or underemployed buy less stuff.

And then there are the Chinese retribution tariffs and taxes and there the US companies won’t get exceptions as easily.

No, this is not “typical modern capitalism”. These are stupid pointless Trump tarrifs, a product of a mentally ill person. Nothing more.

What’s the big deal? Just raise the price of the car to cover the tariff. Whatever amount that might be is a rounding error on a $50-100,000 car. Or, just eat the tariff and make a little less profit. Their always bragging about the huge profit margin built into the car, a little less shouldn’t kill them. They could also do what Americans want and forget the supplier and start building them here. They started a car company from nothing, a solar company from nothing, a battery plant from nothing, Elon started a rocket company from nothing, why not an electronic company from nothing?

In any case, I see no reason why Tesla, or anybody else should get a pass.

An American company that employees about 50,000 Americans and you don’t support it. I’m not sure where you live possibly Russia.

How am I not supporting an American company?? I gave three possible solutions to Tesla’s supposed problem. One is revenue neutral for them and one of them is a potential new business venture for them. Everybody claps their hands and praises Elon because he got into the battery business and “cut out the middle man”, so why not get into the automotive brains business and cut out that middle man too? Are you telling me that setting up a manufacturing division to make circuit boards is more difficult than setting up a company to bore holes under LA with ridiculous slot car tracks in them?

Russian trolls have been hitting this site hard. It’s unfortunate that Russia ruined the internet. Things will only get worse until Putin is made an example of.

As opposed to Chinese trolls.

As opposed to American trolls??

Really? What make you think I’m a Russian troll? In addition, instead of the usual intellectually lazy strategy of ad hominem attack, you could actually try to explain why this Russian troll is wrong.

Most recently your typical Russian troll response whataboutism : “As opposed to American trolls”.

The article should make it clear these are Trump tarrifs. He is solely to blame for these stupid tarrifs, which are simply taxes.

No, china is to blame. They have been destroying the west, esp America, via unfair economic trade. The original deal Clinton made with china was to drop their tariffs, not increase them 10-fold.

If Tesla feels there is no way around China for producing the brain of its vehicles than maybe we have become a bit too dependent on a country that in its methods often amounts to organized crime.

Wow. Tesla fan, but I hope gov says no. China is screwing the west with tariffs and it needs to stop.

Trump against the world isn’t going to work. He should have worked with our Allies, TPP and WTO.
I doubt that China will deal with Trump on Tariffs. Trump isn’t trustworthy in negotiations just look at McConnell with the shutdown. He doesn’t respect treaties that are made look at Iran. He celebrates a victory after the hose passes bill ending Obamacare even though Senate didn’t vote on it. Which ultimately didn’t pass.
He’s fighting every day just to stay out of jail.
Nobody knows what Trump wants or will accept because he doesn’t even know. Trump will contradict himself in the same speech.

Really, what exactly do we make here that would be competitive against Chinese goods in China? Oh, not a single thing? Ok, then.

Actually, LOTS of things, esp if they would quit putting massive tariffs on the goods.
You think that America can not compete? Then why does China use 25-50% tariffs on our goods?
The very fact that they do that, illustrates that you have missed that mark by 1000s of kms

Scott we sell Soybeans, Semiconducters, Airplanes, Industrial Equipment, Plastic. Copper, Autos

American companies have benefited from low cost labor in China (and elsewhere), but they are also sowing the seeds of their own demise. Apple was just passed by Huawei for title of largest smartphone manufacturer, and they will find Chinese companies to be fierce competitors from now on. The genie isn’t going back into the bottle. China is an economic superpower with a nation of intelligent, hard working people. They lacked industrial infrastructure a generation ago – but that has been rectified – in large part by American companies who are now threatened by the giant they helped create.

Regarding tariffs, the pro-corporate media is owned by companies like GE that have outsourced manufacturing to lower cost countries for decades. Tariffs work to protect domestic manufacturing, but are not so good for multinational companies that have already outsourced. I disagree with most of what Trump is doing, but agree with him on tariffs and his assessment that America’s industrial base has been hollowed out.

Nope, America’s industrial base hasn’t been hollowed out; manufacturing output is not far off it’s all time high.

see: https://www.forbes.com/sites/jimvinoski/2018/08/21/us-manufacturing-the-reports-of-my-death-are-greatly-exaggerated/#6b5870cd3884

Manufacturing employment is off about 40% however, mainly due to automation and productivity improvements.

Oh, yeah. What exactly do we manufacture here which would be competitive in China against Chinese goods were there no Chinese tarrifs?

Are you under the impression that tariffs will bring manufacturing back to the USA? Because the opposite is occuring. American companies are moving manufacturing to China to avoid tarrifs.

again, why does CHina need massive tariffs on our goods then?
And companies are now leaving China because of Trumps Tariffs and it is already having a HUGE impact on China’s economy.

There is no domestic manufacturing to protect here in the USA. You are supporting the unfair taxation of Americans in an attempt to punish China. The poorest Americans are the ones worst hit by tarrifs. So, to punish China, you are supporting hurting poor Americans. The end result of these Tarrifs will be a recession, nothing more.

Wrong.
We remain one of the larger manufacturers in the WORLD. STILL. To claim otherwise, shows that you really are either foolish, disingenuous, or work for another nation, like China.

https://www.worldatlas.com/articles/10-countries-with-the-highest-industrial-outputs-in-the-world.html

Isn’t this a good thing for quality assurance? I hear repeated comments on the poor quality of Chinese goods. Especially as related to automobiles.
Surely there are US alternatives with higher quality.

A Silicon Valley company should be able to manufacture here. So give them 12 months to set up another supplier and then tariff the hell out them. Thus far, the Chinese economy is hurting far more than the American economy.

Seems now kind of stupid of Tesla to lower the price of all their cars by $2,000. I mean, two grand had to have been enough to cover the 25% increase on one component of the whole car right?

This is where mindless uneducated populism gets us.

The smart thing to do would have been to push for change through the WTO with our allies, not alienate everyone else without a plan in place, that’s poor leadership and bad diplomacy.