Opinion - End US tax breaks that enrich Chinese companies
Republicans and Democrats have rung alarm bells for years about Beijing's efforts to infiltrate America's industrial base, warning not just about the threats of espionage and sabotage that follow their investment, but also of the human rights abuses linked to Chinese companies.
Just last month, Reuters reported that rogue cellular radios and communications devices were found in Chinese batteries, electric vehicle chargers and solar panels that are already in the U.S.
Despite those warnings, China, with help from the Biden administration, Democratic governors and members of Congress, has established footholds in America's emerging electric vehicle battery sector.
Gotion, a company with deep ties to the Chinese Communist Party, has begun building plants in Michigan and Illinois despite strong local pushback. Last year, President Trump wrote on Truth Social that the Gotion plants 'would put Michiganders under the thumb of the Chinese Communist Party in Beijing.'
CATL — a company designated by the Pentagon as a 'Chinese military company' — is working with Ford in Michigan, and also has footprints in several other states.
Secretary of State and acting National Security Advisor Marco Rubio previously sought to block CATL's Michigan plant, writing that the facility will 'only deepen U.S. reliance on the Chinese Communist Party for battery tech.' He also highlighted the company's 'ties to forced labor and to Xinjiang' and urged the Department of Homeland Security to add CATL to the Uyghur Forced Labor Prevention Act Entity List which would blacklist its products in the United States.
President Trump and Secretary Rubio are right, but even with Republicans in control of Washington, these malicious actors continue to operate in the U.S. Troublingly, the reconciliation legislation, deemed The One, Big, and Beautiful Bill, which recently passed in the House, fails to fix loopholes created by the Biden administration's Inflation Reduction Act.
This legislation, which the Senate is now considering, leaves the window open for Chinese companies to benefit from U.S. tax credits, specifically the 45x Advanced Manufacturing Production Credit, an uncapped incentive program for certain manufacturing projects.
Unless the Senate fixes this legislation, American taxpayers will be on the hook for funding our foremost adversary. For although Chinese companies cannot receive tax credits on their own, they can easily bypass this restriction by establishing joint ventures or taking advantage of projects that license Chinese technology to receive tax credits for at least two more years.
Right now, the highest-profile project that would benefit from these credits is Ford's BlueOval Battery Park Michigan, which relies on CATL's battery technology. Under this arrangement, Ford will pay CATL to license its technology and operational services for the plant.
Under the House bill, U.S. companies that receive 'material assistance' from prohibited foreign entities like CATL will remain eligible to receive 45X tax credits for at least two years. That is two years of uncapped tax credits for this plant. Any federal financial benefits Ford receives from this tax credit will indirectly flow to CATL.
Ford has yet to disclose the details of this arrangement, despite threats of congressional subpoena, so the American people still have no idea of how much of their dollars will flow to Beijing.
Ford has committed itself to this project, despite the clear economic and national security threats. The U.S. House, unfortunately, greenlit this arrangement.
The Department of Defense, meanwhile, had already outlawed battery procurement from CATL, Gotion and four other Chinese companies. It is now up to the Senate to protect America from China's malicious efforts to dominate America's critical technologies. The Senate should align its legislation with existing policy.
As a first step, the Senate must ensure that any and all U.S. manufacturing projects that rely on China-affiliated companies are wholly ineligible, directly or indirectly, for U.S. tax credits.
Moving further, they should stop Chinese companies from further infiltrating America's industrial base and block U.S. companies from working domestically with any company listed by the Department of Defense as a Chinese military company or that is considered a foreign entity of concern.
In his first term, President Trump elevated the threat that China poses to the United States. In his second term, he must use all tools of American power to confront it head-on.
An integral part of that effort will require the Senate to ensure that the landmark legislation of his first term — the One, Big, Beautiful Bill Act — delivers zero benefit to Beijing.
Gabriel Noronha is the president of POLARIS National Security. He previously served as the special advisor for Iran at the Department of State in the first Trump administration and as the special assistant for the Senate Armed Services Committee under the late Chairmen John McCain (R-Ariz.) and James Inhofe (R-Okla.).
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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