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Chairman Smith Warns Treasury Must Act Immediately to Stop Tax Dollars from Flowing to China, Demands Automakers Provide Details on Foreign Partnerships

September 19, 2023

WASHINGTON – Ways and Means Committee Chairman Jason Smith (MO-08) warned the Biden Administration, in a letter to Treasury Secretary Janet Yellen today that long delayed regulations must be immediately issued to prevent taxpayer funded subsidies for electric vehicles and batteries in the so-called Inflation Reduction Act (IRA) from flowing to adversarial nations such as China.

“While I do not agree with the policy that provides massive taxpayer-funded subsidies for electric vehicles, certainly we should be able to agree that taxpayer funds should not flow in a way that benefits the Chinese Community Party (CCP) or other entities who do not share our aligned interests.  Treasury guidance should make clear in the most comprehensive way possible that taxpayer subsidies cannot flow to foreign entities of concern through any structuring mechanism conceivable. Guidance on this topic should be as strict and prompt as possible so there is no ambiguity that the benefit of taxpayer subsidies cannot end up in the hands of our adversaries,” wrote Chairman Smith.

The Biden Administration’s implementation of the IRA green subsidies has been singularly focused on furthering a radical green agenda at the expense of our national security. For over a year, the Treasury Department has slow-walked these regulations that would prevent these IRA green subsidies from flowing to our adversaries.

In conjunction with his letter to Treasury, Chairman Smith sent follow-up letters to electric vehicle (EV) automakers, Nissan and Tesla, requesting further clarification whether misguided incentives from the IRA have enticed EV automakers to enter into partnerships with Chinese companies or those from other adversarial nations.

“The Committee on Ways and Means remains committed to protecting American workers and businesses and remains concerned that electric vehicle (EV) sourcing rules in the IRA continue to provide loopholes that allow EV automakers to circumvent protections for taxpayers and their money,” wrote Chairman Smith.

In April, following reports that Ford Motor Company is partnering with China’s Contemporary Ameperex Technology Co. (CATL) to spend $3.5 billion on a new electric vehicle battery factory in Michigan after passage of the IRA, Chairman Smith blasted Ford and demanded the company provide additional information on the partnership and called on other U.S. automakers to detail any similar partnerships. Both Nissan and Tesla’s response to Smith’s initial inquiry failed to fully address his concerns, which led him to seek additional information.

According to Ford’s public statements, the IRA’s green corporate welfare checks were “incredibly important” in establishing this partnership with a company tied to the Chinese Communist Party and alleged connections to forced labor practices. Chairman Smith and Chairman Mike Gallagher (R-WI) of the Select Committee on the Chinese Communist Party further underlined their concern with the CATL partnership in a letter to Ford in July after new details came to light showing CATL’s ties to forced labor and Ford’s potential reliance on Chinese technology, minerals, and employees.

Read the letter to Treasury Secretary Yellen here.

Read the letter to Nissan here.

Read the letter to Tesla here.