Senator Rubio seeks stiffer tariff to stop China 'flooding US auto markets'

By David Shepardson

WASHINGTON (Reuters) - Republican U.S. Senator Marco Rubio on Tuesday proposed sharply boosting tariffs on Chinese vehicle imports by $20,000 to stop the country "from flooding U.S. auto markets," Washington's latest effort to protect American automakers and auto workers.

Rubio, top Republican on the Senate Intelligence Committee, said he is also proposing legislation to extend tariffs to vehicles produced by Chinese automakers in other countries like Mexico and limit subsidies for electric vehicles to those that meet stringent North American free trade rules.

Rubio said the flat tariff would address the disproportionate advantage of lower-end Chinese autos and close loopholes that reduce the amount paid and "safeguard American automakers and workers against the influx of artificially cheap vehicles from China."

With national elections coming in November, Democratic President Joe Biden and leaders of both parties in Congress are backing steps to limit Chinese electric vehicle imports.

"America’s existing tariffs, once effective, are now insufficient to counter China’s newest strategies," Rubio said, calling for "a multi-pronged effort to prevent the Chinese Communist Party from entering the American auto market before it is too late."

The issue has received new interest after news reports that China's BYD plans to set up an EV factory in Mexico. BYD, known for its cheaper models and a more varied lineup, recently overtook its biggest rival, Tesla, to become the world's top EV maker by sales.

Last week, the White House said it was opening an investigation into whether Chinese vehicle imports pose national security risks and could impose restrictions due to concerns about "connected" car technology.

"China's policies could flood our market with its vehicles, posing risks to our national security," President Joe Biden said in a statement. "I’m not going to let that happen on my watch."

Senator Gary Peters, a Michigan Democrat, praised the investigation saying "there’s no place in the U.S. for vehicles made by Chinese Communist Party backed companies."

There are relatively few Chinese-made light duty vehicles being imported into the U.S. On Friday, the Chinese foreign ministry said Chinese cars were popular globally not because of "so-called unfair practices" but because they had emerged out of fierce market competition and were technologically innovative.

Last month, a U.S. manufacturing advocacy group warned that low-cost Chinese autos and parts from Mexico "could end up being an extinction-level event for the U.S. auto sector."

Last week, Republican Senator Josh Hawley introduced legislation to raise the base tariff rate on Chinese imports to 125% from 27.5% currently. The measure also seeks to apply a 100% tariff hike to vehicles assembled in Mexico by Chinese-based automakers.

(Reporting by David Shepardson; Editing by David Gregorio)