Tesla urges tariff exemption for Chinese-made car computer 'brain'

Company warns ongoing trade war with China will harm quality of its cars and damage profitability

A Tesla plant (AP)

Tesla, the American energy and motor giant, has warned that Donald Trump’s ongoing trade war with China could reduce the quality of its cars and damage profits.

The multi-billion dollar firm – led by Elon Musk – has requested to have the Chinese-made parts used in its most popular vehicles exempted from the major import tax hikes being imposed by the US government.

“Increased tariffs on this particular part cause economic harm to Tesla, through the increase of costs and impact to profitability,” the company said in a previously unreported request for tariff relief.

It puts Tesla among an increasing number of American corporate giants to warn that Mr Trump’s policy of imposing huge tariffs on Chinese imports could significantly damage the US economy.

General Motors and Uber Technologies have already raised concerns while, just this week, Apple lost 9 per cent of its value after revealing growth had slowed in China.

Analysts said it had been hit by the retaliatory tariffs which China has placed on US imports, which includes iPhones.

In its own request for its imports to be exempted, Tesla said a “super-computer” used in its Model 3 sedan car could not be made by anyone else but its current manufacturer in China. The company said it had been unable to find another maker able to meet the “the volume requested and under the timelines necessary for Tesla’s continued growth”.

Using a new supplier “substantially increases the risk of poor part quality that could lead overall vehicle quality issues that would impact the safety of our vehicles and the consumer acceptance of the final product,” the firm added.

Asked about the request on Friday, the company declined to comment.

The Trump administration has imposed 25 percent tariffs on a total of $50 billion in annual Chinese imports and 10 percent tariffs on an additional $200 billion in Chinese imports. The tariffs were in response to what the Trump administration calls the country’s unfair trade practices.

In response, China accused the US of starting "the largest trade war in economic history" and imposed tariffs on $110 billion worth of American goods.