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Major carmakers sue US government over China tax

Major carmakers are suing the US government over import taxes it has imposed on Chinese parts.

Tesla, Volvo, Ford and Mercedes-Benz are all unhappy with the customs duties introduced by the Trump administration and are demanding refunds.

The US and China have imposed border taxes on each other’s goods and services as part of a trade war.

Tensions between Washington and Beijing have rapidly escalated in recent weeks, mainly concerning technology firms.

The lawsuits were filed by the carmakers in the past few days in the New York-based Court of International Trade.

Mercedes-Benz in its filing accused Washington of “prosecution of an unprecedented, unbounded, and unlimited trade war impacting over $500bn in imports from the People’s Republic of China”.

Tesla in its filing called the tariffs “arbitrary, capricious, and an abuse of discretion”.

The car firms are asking for the import taxes to be revoked and any money paid to be returned.

Trade war

The trade war began in 2018 between the world’s two biggest economy.

US President Donald Trump has long accused China of unfair trading practices and intellectual property theft.

In China, there is a perception that America is trying to curb its rise as a global economic power.

Early this year the two signed their “phase one” deal that partially ended the dispute. Washington backed down on tariffs on $160bn in Chinese goods, particularly consumer electronics.

However, tensions between the two nations have massively ramped up since.

Earlier this month the World Trade Organization (WTO) ruled that tariffs the US imposed on Chinese goods were “inconsistent” with international trade rules.

The WTO said the US did not provide evidence that its claims of China’s unfair technology theft and state aid justified the border taxes.

But the US retaliated saying that the WTO was “completely inadequate” to the task of confronting China.

Ambassador Robert Lighthizer, America’s top trade negotiator, said the US “must be allowed to defend itself against unfair trade practices”.

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