U.S. rejects Tesla's request for tariff exemption for China-made Autopilot 'brain' in Model 3

U.S. trade officials rejected Tesla Inc.'s request for relief from Trump's 25 per cent tariffs on the China-made Autopilot "brain" in the Model 3 and other electric vehicles.

According to a Reuter’s report, U.S. Trade Representative's office denied exclusion requests from Tesla and others for Chinese-made products from automotive and aircraft parts to biotechnology instruments, the reason being they were considered "strategically important" to the "Made in China 2025" program.

Tesla has also submitted tariff exclusion requests for duties on the China-made Model 3 center screen and for the Model 3 car computer, which are still pending.

"Our costs for producing our vehicles in the U.S. have also been affected by import duties on certain components sourced from China," Tesla said in a U.S. Securities and Exchange filing on April 29.

The denials are a part of Trump administration’s effort to stop China’s alleged effort for forced transfer of U.S. intellectual property.

Made in China 2025 is a program that is designed at growing China's prowess in 10 strategic industries dominated by the United States. It is playing an important part in US China trade negotiations.

Tesla submitted the first exclusion request for the 3.0 Autopilot electronic control unit in July 2018, which it called the "brain of the vehicle". In a March 15, 2019 letter, USTR general counsel Stephen Vaughn denied Tesla's request.

Tesla also argued that it was unable to find a manufacturer in the United States and 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."

The Autopilot ECU is supplied to Tesla by supplier Quanta Shanghai.

Other automakers have also reported pending exemption requests on various parts imported from China. General Motors in late July sought an exemption to a 25-percent U.S. tariff on its Chinese-made Buick Envision crossover. The company also sought exclusions for dozens of parts, which have not been granted. Nissan Motor Co. and Fiat Chrysler Automobiles NV have also filed exclusion requests for parts and are waiting for response.

Experts say some tariffs, especially those aimed at the Made in China 2025 industries, would continue to stay because of the enforcement mechanism.