The Biden administration has issued a warning to Chinese electric vehicle manufacturers about potential consequences if they try to shift their production operations to Mexico to sidestep newly imposed import taxes. President Joe Biden instructed the U.S. Trade Representative to enforce a total tariff exceeding 102% on Chinese EVs and impose tariffs on various items such as steel, aluminum, computer chips, and solar cells. Despite the tariffs imposed, Chinese electric vehicle company BYD has hinted at exploring factory locations in Mexico for the Mexican market, hinting at a possible tactic to access the U.S. market indirectly.

During a White House news briefing, U.S. Trade Representative Katherine Tai alluded to the potential for additional penalties but did not specify the exact measures that could be taken. Tai emphasized that any penalties related to Chinese companies moving production to Mexico would require a distinct process separate from the recent Section 301 review that resulted in tariffs on Chinese imports. She acknowledged the discussions with industry stakeholders, workers, and partners regarding the possibility of China using Mexico as a loophole to evade import duties. Tai's office highlighted that aside from tariffs, other actions could be taken, pointing to provisions within the U.S.-Mexico-Canada Agreement designed to address unfair subsidies and attempts to bypass import duties.