Tesla Sues to Block ‘Unlawful’ Trump Tariffs on Chinese-Imported Goods

California--Tesla Inc. is suing the federal government and U.S. Trade Representative Robert Lighthizer to block the Trump administration from collecting tariffs on certain items the electric car maker imports from China.

The California-based electric vehicle and clean energy company filed its lawsuit Monday in the U.S. Court of International Trade, arguing that the Trump administration’s tariffs on the goods are unlawful. It seeks a cancellation and refund of the duties it has already paid, with interest, Bloomberg first reported.

U.S. Trade Representative Robert Lighthizer is named as the defendant in the case, and Tesla is challenging the actions he made that affected the company financially. Tesla aimed to avoid 25% tariffs on the Chinese-made computer and central display screens it uses in the Model 3 sedan. This request was denied by Lighthizer.

The tariffs increased costs for Tesla, which ultimately would cause economic harm. Tesla argued that the increased cost of imports would hurt the financial state of the company as the U.S.-China trade war raged on.

Inversely, China planned to significantly lower the import tariffs for vehicles and other products, which CEO Elon Musk approved of. “This is a very important action by China. Avoiding a trade war will benefit all countries,” Musk said in April 2018.

Before the tariffs were finally reduced, Tesla was forced to hike prices of the Model S and Model X by $22,647 and $37,744, respectively. The price hikes caused Tesla to sell fewer vehicles in China during these times.

The company had even rolled out a program that reduced the prices of its vehicles by 12 to 26% by absorbing a significant part of the 40% tariff that was placed on its vehicles. The program aimed to make the Model S, Model X, and Model 3 more affordable for Chinese customers. This was effective until China added Giga Shanghai to the area’s “Free-Trade Zone.”

Tesla’s move to block the collection of tariffs by the Trump administration would prevent the government from making a profit on Chinese-produced parts of U.S.-built cars. The tariffs cost Tesla more money and negatively affect its profit margins.

The case is labeled as Tesla Inc. v. U.S., 20-03142, U.S. Court of International Trade in New York.