BYD's Junk Cars To Enter Us Market With Zero Tariffs?

BYD's Junk Cars To Enter Us Market With Zero Tariffs?

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According to The Wall Street Journal, sources revealed that BYD, headquartered in Shenzhen, is scouting factory locations in Mexico and has begun feasibility studies. The Mexican Ministry of Economy stated that Stella Li, a senior executive at BYD, visited Mexico in January 2024 to discuss the company's expansion plans and negotiate terms, including factory location, with local officials.
BYD, renowned for its affordability in China, surpassed its largest competitor, Tesla, in the last quarter of 2023, becoming the world's top-selling electric vehicle manufacturer. It's believed that BYD's reasons for potentially establishing a factory in Mexico are to lower costs and evade tariffs.

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Mexico serves as a natural transit point for Chinese automakers entering the American market due to its proximity, relatively lower labor costs, and opportunities to benefit from low or no tariffs on Mexican-made cars.

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Currently, Chinese-made electric cars imported into the US face a 27.5% tariff, composed of a 2.5% standard tariff for imported vehicles and an additional 25% tariff imposed by the Trump administration in 2018 on Chinese-made cars. 

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In contrast, cars produced in Chinese-owned factories in Mexico will only be charged the standard 2.5% tariff. If the cars produced in Mexico meet the strict local content standards outlined in the 2020 United States-Mexico-Canada Agreement, they may even be exempt from tariffs.

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