- Tesla Inc (NASDAQ: TSLA) is suing the U.S. government and U.S. Trade Representative Robert Lighthizer for the Trump administration’s tariffs on products that the automaker imports from China
Tesla Inc (NASDAQ: TSLA) is suing the U.S. government and U.S. Trade Representative Robert Lighthizer for the Trump administration’s tariffs on products that Tesla imports from China, according to CNBC. And the lawsuit filing also lists the acting commissioner of U.S. Customs and Border Protection Mark Morgan as a defendant.
The lawsuit — which was was filed in the U.S. Court of International Trade — is seeking to declare two batches of Trump administration tariffs to be voided and refund the tariffs that Tesla paid with interest.
The tariffs named in the lawsuit are known as List 3 and List 4. List 3 went into effect on 2018 and places 25% duties on $200 billion of imported goods from China. And List 4 went into effect in 2019 and consists of a 7.5% tariff on $120 billion of Chinese imports.
The lists contain hundreds of very specific items that range from raw materials to electronic components. However, the lawsuit did not specify the products that Tesla paid tariffs on or how much it paid.
In the filing, Tesla’s lawyers wrote that 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.”
As part of a tariff waiver processor, Tesla applied for artificial graphite, silicon oxide, and door ring tailor welded blanks in 2019 and all 3 were granted with an expiration date of August 2020. But last year, U.S. trade officials rejected Tesla’s request for relief on 25% tariffs on the car computer and screen for the Model 3. The argument was that these parts were strategically important for Chinese national security programs.
Tesla countered by saying that those affected parts are the brain of its autopilot system. This module is contained within the Autopilot engine control unit (ECU), which is a module assembled in Shanghai, China by Quanta Computer. This part is subject to 25% in punitive tariffs. Tesla said that it is unable to source manufacturing for the Autopilot ECU 3.0 in the United States with the required specifications at the volume and timelines requested.
Tesla also did not gain an exemption for its media control unit (MCU) for the Model 3. The MCU has 3 printed circuit board assemblies that are built within a mechanical chassis. The media control unit is responsible for the data that goes to and from the touch display, audio speakers, microphones, connectivity board, Bluetooth, Wi-Fi, USB charger, and back-up camera.
“Increased tariffs on this particular part cause economic harm to Tesla, through the increase of costs and impact to profitability,” wrote Tesla in the waiver request. “Due to the complexity of the Model 3 Car Computer and the demanding timelines necessary for Tesla’s exponential growth, Tesla is unable to find another manufacturer to meet our requirements.”
Tesla is not the only automaker that is suing the Trump administration for tariffs on computer chips and other parts that are imported from China. Ford, Mercedes-Benz, and Volvo also filed lawsuits against the U.S. government due to the tariffs.
Disclosure: I have a small position of Tesla in my portfolio.
