China economy

Uber says trade war tariffs are ‘causing disproportionate and severe economic harm to US interests’

  • Ride-hailing company asks for exclusion from import duties on electric bikes ahead of Thursday’s deadline to avoid 25 per cent tariff on US$16 billion list
  • San Francisco-based company said they have allocated more than US$1 billion to spend on scooters, electric bikes and other alternative forms of transport in 2019
PUBLISHED : Wednesday, 19 December, 2018, 10:51am
UPDATED : Wednesday, 19 December, 2018, 10:18pm

Uber has asked the United States government for an exclusion from new tariffs on Chinese imports on thousands of a new generation of its electric bikes being produced in the mainland.

They have ambitious plans for its bike and scooter business, and the tariffs could pose a significant cost for the San Francisco-based company.

Uber now makes nearly 1,000 electric bikes a day in China, said two people familiar with the matter, who asked not to be identified because the information is private.

The ride-hailing company has allocated more than US$1 billion to spend on scooters, electric bikes and other alternative forms of transport next year, Uber vice-president Rachel Holt said in a recent interview.

Uber filed a request, which was posted on Monday by the Office of the US Trade Representative, to exclude electric bicycles from a list of US$16 billion in Chinese imports hit with a 25 per cent tariff.

Thursday is the deadline for companies to file requests for duty exclusions from products on the US$16 billion list, and as of December 14, almost 1,000 requests had been filed, according to the Office of the US Trade Representative.

Decisions are based on whether a product is available only from China, whether duties “would cause severe economic harm” to the company or US interests, and whether the item is strategically important.

As Uber and other start-ups like Lime and Bird Rides Inc. make thousands of electric scooters and bikes in China that are destined for US streets and pavements, these companies have been thrust in the middle of a global trade war.

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The Trump administration imposed the 25 per cent tax in August on US$16 billion worth of Chinese imports, including scooters and electric bikes, in the second round of duties as the US angles for a trade deal with China.

The 25 per cent duty “is causing disproportionate and severe economic harm to US interests,” while failing to address allegations of Chinese theft of intellectual property and other trade concerns, said Uber, without disclosing financial information.

The company is currently preparing financial disclosures to be published ahead of an initial public offering next year.

Ninety-six per cent of all electric bicycles imported into the US in 2017 were produced in China, and US businesses have no viable domestic or third-country alternative, Uber said in its filing.

Higher costs from the tariffs come at the expense of Uber’s further investment in new technologies and product development, expansion of plants and US job creation, the company said in the trade filing.

The duties put US businesses at a disadvantage to foreign competitors, it added.

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The tariffs will also result in higher prices and reduced availability for customers, Uber said.

“This is particularly harmful to those Americans who otherwise stand to benefit the most from electric bicycles, including those who are ageing, face physical limitations, are less affluent, or live in hilly areas or communities underserved by public transportation,” the company said in its filing.

“Uber is deeply concerned by these negative consequences.”

The Trump administration is also considering almost 10,800 exclusion requests from initial duties imposed in July on US$34 billion in goods.

As of December 14, 1,487 requests had been denied, while 664 were being reviewed by US Customs and Border Protection “to determine whether an exclusion would be administrable,” according to the Office of the US Trade Representative.

The Trump administration has also imposed a 10 per cent duty on an additional US$200 billion in goods, but a planned increase to 25 per cent on January 1 has been delayed until March 1 as the US and China discuss a possible trade deal.