Trump administration denies tariff relief for Chinese-owned CRRC MA; Springfield rail factory employs 248

SPRINGFIELD — The Trump administration has denied CRRC MA’s request for 16 separate exemptions from the 25-percent import tariffs slapped this summer on rail car components the company uses here in Springfield to build cars for the MBTA.

In a series of letters dated Feb. 4 and available online, the office of the U.S. Trade Representative said that letting CRRC MA off the hook for a 25 percent tariffs would defeat the purpose of the tariffs in the first place. Each rail car costs $2.5 million.

Each of the exemptions was for a specific part, like an air duct or a battery box. The cars are built in China as a shell and shipped here to be fitted out and assembled.

Not all the parts come from China, as the MBTA requires 60 percent domestic parts.

The Trump administration has accused China of using its power in the marketplace to mandate the transfer of technology to its industries and to drive out competition from world markets.

U.S. Rep. Richard E. Neal, D-Springfield, is following the situation and remains an advocate for CRRC and its Springfield operations, said spokesman William Tranghese. Neal is chairman of the powerful House Ways & Means Committee, which oversees tax policy administration, including tariffs.

CRRC MA, the subsidiary here in Springfield, has a total of 248 employees and most are in Springfield or Boston with a few in Los Angeles. Of the 248, 152 work in Springfield and 90 are union production employees.

The company plans to hire 48 more Springfield factory workers when it ramps up to full production.

Meanwhile, the U.S. and China begin high-level trade talks Thursday in Washington aimed at resolving a brewing trade war and settling issues before a March deadline.

With no deadline on March 2, a 10 percent tariff increase imposed on $200 billion of Chinese goods is due to rise to 25 percent March 2, according to the Associated Press.

CRRC officials declined to comment on tariffs this week. But this fall, when they were drumming up local support for their case to be excluded, executives at CRRC said the tariffs are an unfair impediment to job creation.

In January, Sun Yongcai, general manager and deputy party secretary at CRRC Group, told a gathering of world economic leaders in Davos, Switzerland that the trade disputes between the two nations are only temporary.

“The two countries are in the middle of discussions and negotiations. With the wisdom from both nations, I believe that we can reach an agreement that’s acceptable to both sides.”

Ambassador Huang Ping, the Chinese consul general for New York, spoke at a rolling-out ceremony in December as the first Springfield-based cars were completed.

"The U.S. should see China as a valued partner not only in our economic growth but in solving problems around the world," he said.

CRRC built a $95 million factory at the old Westinghouse site in East Springfield to build transit cars. CRRC MA also has plans to build a 42,500-square-foot warehouse at its Page Boulevard factory to house large components.

In 2014, CRRC received a $566 million contract from the MBTA to build 152 Orange Line cars and 252 Red Line cars at the Page Boulevard site. In December 2016, the state upped the order with another 120 new Red Line cars, with production set to begin in June 2022 at a cost of $277 million.

CRRC MA also has contracts to make cars here for Los Angeles and Philadelphia and has proposals out to Atlanta and elsewhere.

Massachusetts went without federal funding on the cars so that it could mandate that they be assembled in Massachusetts. The idea was to foster an industry of making rail cars in Massachusetts.

Production began on the first Orange Line Cars in April and will begin making Red Line cars in later this year.

The first of the Orange Line cars are undergoing tests now on the MBTA.

It’s difficult to determine how much the tariff will impact the cost to the MBTA. While each car averages $2.5 million each, not every part is subject to the tariff.

Joe Pesaturo, a spokesman for the Massachusetts Bay Transit Authority said it is the MBTA’s position that the contract between the authority and CRRC MA for new rail cars is such that CRRC MA is responsible for any cost implications associated with changes in tariffs.

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