ArentFox Schiff Electric Mobility Practice Addresses the 2023 Battery Show
Over 800 exhibitors packed the floor at the Suburban Collection Showcase venue, each displaying their newest technologies throughout the EV ecosystem – from Tier Three to Original Equipment Manufacturers.
Antonio Rivera of the firm’s Electric Mobility team was asked by organizers to address a plenary session on a panel discussion titled: Winning the Global EV Race. While panelists described the fast-evolving electric vehicle industry, Antonio offered somber caution of the game changing role US trade rules play for companies seeking to gain a competitive advantage in the US market, for both the EV sector and the traditional internal combustion engine (ICE) industry.
The four-day conference came at a critical juncture for many companies in the electric vehicle sector. Funding support from the 2022 Inflation Reduction Act (IRA) was top of mind for many, but as Antonio made clear in his remarks, US trade regulations and compliance enforcement are equally important for many c-suite office holders. For instance, he noted, continuing US tariffs on component parts from China, many triggering double-digit duty rates, are not expected to go away anytime soon. Meanwhile, the United States-Mexico-Canada Agreement's (USMCA) 75% regional value content requirements are factoring into production and supply decisions throughout the industry. How to avoid the former and take full advantage of the latter can, he suggested, make a critical difference in a risk avoidance corporate environment.
As one original equipment manufacturer (OEM) executive recently noted, “This is why the USMCA requirements are more important than the Inflation Reduction Act, which generated a lot of political noise.” In a podcast recorded at the event, David Hamill of our team made that point clear when he said, “to win the global EV race, one must first win the US EV race”.
Judging from audience questions and discreet conversations AFS team members had on the show floor, cost competition and risk avoidance rank high when it comes to the global race. Many asked how to determine (and properly calculate) product and production value to take full advantage of the USMCA tariff reduction benefits, for both their downstream suppliers as well as upstream customers. Others sought the team’s views on whether their procurement decisions that rely on suppliers in China are subject to US “301” tariffs and if so, how the tariff exclusion requests are best presented for Washington’s approval.
Untangling the tangle of US trade rules is an important first step in a strategic approach for any company doing business in the United States. Whether companies are start-ups, scale-ups or well recognized brands, finding the cost saving opportunities in the USMCA while avoiding tariff costs and mitigating risk exposure are keys to success in this very exciting industry.
This is where the Electric Mobility Practice can help companies start untangling.
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