US Government Rejects Uber's Request For Tariff Hike Exemption

Uber Technologies
Logo of the Uber is seen on a smartphone screen as a picture of stock exchange graph is displayed (Photo: Reuters / Kacper Pempel)

Ride-hailing giant Uber Technologies, like many other companies who export major products from China, had reportedly requested the US government to exempt it from Trump's recently imposed 25 percent tariff hike. That request was unfortunately denied, according to a letter that was sent by the US Trade Representative's Office.

The company, which recently went public this year, requested that it be exempt from the higher tariffs given that it imports a majority of its electric "jump" bikes from China.

The electric bicycles are a big portion of Uber's business, operating in over a dozen cities throughout the United States. According to Uber, over 96 percent of its electric bicycles are made in China and they were directly impacted by Trump's new tariffs that were imposed last year.

Uber mentioned in a statement that the first wave of tariffs on $16 billion worth of Chinese goods last year had included their electric bicycles. This had apparently caused "disproportionate harm" to their business and their ability to be competitive in the specific market.

Uber's CEO Dara Khosrowshahi also mentioned in an interview on Tuesday this week that Trump's slew of tariff hikes have negatively impacted its initial public offering (IPO). The executive explained that Uber's IPO came at such as inopportune time and that it got caught up in the market chaos instigated by the escalated trade war between China and the United States.

The company went public on May 10 after months of preparations. Trump's administration on the other hand effectively raised tariffs on over $200 billion worth of Chinese goods on the same exact day.

Uber recently reported that it had experienced about $1 billion in losses for the first quarter since its market debut. The company did report $3.10 billion in revenues for the same period.

Due to the nature of its business model, Uber is still hemorrhaging money. Khosrowshahi assured investors that the company can still become quite profitable, but it would likely take another 2 to 4 years before that happens.

Apart from Uber, the US Trade agency also reportedly rejected another electric startup. California-based electric scooter rental service provider Bird Rides also requested the government to be exempt from the increased tariffs reasoning that it really didn't have any alternative suppliers.

The company stated in its request form that the tariffs would only result in a decrease in innovation and the fall of a relatively brand new industry. The trade agency reportedly responded in its decline letter that it saw no ample reason to believe that the taxes would cause economic harm to the company or other US interest.

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