It's a tangled web, this idea of allowing Chinese auto manufacturers inside the US to assemble cars for US consumers and perhaps for export to other North American markets. Even before this presidency, Donald Trump has railed against communist China as a major economic and strategic threat because of large trade imbalances, unfair state subsidies for Chinese companies, intellectual property theft, espionage, and abusive labor conditions.
And yet, the 47th president appears to be rethinking his view of China, particularly with regard to the idea of Chinese companies building cars in the US.
New Jobs Must Have Changed Trump's Mind
Last week during an interview on Fox News’ The Ingraham Angle, Trump said "I'd be OK with it" if Chinese automakers wanted to open plants in the US to assemble cars. "The big thing is they hire our people,” which is the same strategy that automakers from around the world have been doing on American soil for the past 40 years.
But massive opposition has surfaced in the form of a letter sent yesterday to the White House from six US auto industry organizations representing domestic and transplant manufacturers, dealers, parts suppliers, trade representatives, and zero-emissions advocates. They are urging Trump to "maintain policies that keep the door firmly shut to Chinese automakers seeking to sell, import, or manufacture vehicles inside the US."
Do Autos Take Center Stage During President Xi's Visit?
When Chinese President Xi Jinping visits Washington next week and President Trump greets him on the tarmac, we wonder how soon the topic of auto manufacturing will come up. Based on the strongly worded Sept. 17 letter from the auto industry, it can't come up soon enough. Signing the letter were the Alliance for Automotive Innovation, American Automotive Policy Council, National Automobile Dealers Assn., MEMA Vehicle Suppliers Assn., Autos Drive America, and the Zero Emission Transportation Assn. Collectively, these organizations represent nearly every facet of the entire US auto industry, including major automakers.
"Providing Chinese automakers with the ability to manufacture inside the US would undermine fair competition and jeopardize the progress your administration has already made to increase domestic automotive manufacturing, strengthen supply chains and prevent the US from facing the disruptions roiling global auto markets right now."
–Sept. 17 Auto Industry Letter to White House
Current Automakers In US Suffer If China Arrives
The auto industry leaders said that if Chinese automakers and their supply chains are allowed in the US, they would "fundamentally differ from companies headquartered in Europe, Japan, and South Korea, which operate on market principles and have invested substantially in the American economy and American workers" by building dozens of assembly plants in the South and Midwest.
"Chinese automakers have zero market share in the US. Allowing them to open a domestic facility would provide a foothold in the US market at the expense of manufacturers operating here," the letter said. "That would not create new American manufacturing jobs. Rather, it would shift jobs away from manufacturers that have made generational investments in the US and toward companies owned and operated by the Chinese government."
It's Not A Way To Create American Jobs
The industry leaders said the arrival of Chinese automakers would "erode the value of 17,000 auto dealerships in our country that benefit consumers and communities nationwide." In addition, Chinese production in the US would bring fewer jobs "and remain reliant on foreign supply chains. Localized Chinese production will not advance the administration’s manufacturing jobs and national security agendas."
On the security front, the US Department of Commerce recently barred Polestar (which is owned by Chinese automaker Geely) from selling 2027 model year cars in the US because of Connected Vehicle Rules targeting Chinese-owned automotive technology. While the Polestar 3 has been assembled at Volvo's South Carolina plant and the Polestar 4 in South Korea, only the Polestar 2 was sourced for the US from China.
Connected Vehicle Security Threat, Beyond Polestar
Trump's comments in favor of US manufacturing for Chinese automakers directly contradict the Commerce Department's actions against Polestar. The Sept. 17 letter from industry leaders said domestic assembly of Chinese vehicles doesn’t resolve the connected vehicle security threat.
"Even if built in the US, these factories would still rely on Chinese suppliers and Chinese components, and would be overseen by individuals with direct ties to the Chinese government."
–Sept. 17 Auto Industry Letter to White House
The letter called the automotive sector "foundational to our advanced manufacturing and defense base, with the capacity and workforce to respond during a national emergency. Once that base is hollowed out, it can’t be rebuilt overnight." The letter praised Trump for recent protectionist policies that so far have kept inexpensive Chinese cars (that are too numerous to sell solely in China) out of the US.
Meanwhile, Europe, Australia, Southeast Asia, Mexico, and South America are all dealing with the surge in Chinese cars "that are not only capable of collecting and transmitting personal data back to the Chinese government but also weaken the market position of incumbent manufacturers."
CarBuzz Insight – Why This Matters:
Oddly enough, the United Auto Workers have not issued a statement calling out Trump for opening the door to Chinese manufacturers in the US. Might they be thinking the union could grow its membership by unionizing Chinese plants here? Seems highly unlikely. To be clear, all automakers, from Detroit to the transplants from Japan, South Korea, Germany, and Sweden, signed on to the Sept. 17 letter to the White House.
Many of those automakers already have partnerships in China with Chinese automakers, so the idea of expanding those partnerships to US soil has probably been discussed. The industry's statement now makes it very clear what automakers think of allowing Chinese manufacturers in the US.