The cause for alarm came from Trump’s earlier remarks in January in Detroit that it would be “great” if Chinese auto companies wanted to build plants in the U.S. and hire American workers Reuters reports.
The comments sparked a sharp reaction in an industry that has for years pushed for tough restrictions on Chinese cars’ access to the U.S. market through high duties on electric vehicles and strict data protection rules.
Rare unity
Now the auto industry and politicians are trying to prevent Trump from using the meeting with Xi for any deal that would open up Chinese brands to U.S. showrooms or allow Chinese investment in the sector.
Democratic Sen. Elissa Slotkin of Michigan publicly urged the president “not to make a bad deal” and supported a bipartisan bill that would explicitly ban Chinese cars in the U.S. because of data collection risks.
The authors of the bill emphasize that the modern automobile is a “rolling data collection engine” that captures real-time location, movements, people and infrastructure, so Chinese cars and components should not become part of that system.
Seventy-four Democrats and 52 Republicans in the House of Representatives are already in favor of keeping Chinese brands out of the market.
There is rare unity within the industry on the issue. In March, associations of U.S. and foreign automakers, dealers and component manufacturers warned the administration that China’s desire to dominate the global auto industry and gain access to the U.S. market poses a direct threat to U.S. global competitiveness, national security and the very industrial base of the auto sector. Later, the steel industry also sent a similar letter.
The Trump administration is fighting back
Officially, administration officials are still trying to calm the market, investirg.com notes. U.S. Trade Representative Jamison Greer said in April that there are no plans to change the rules, and the topic of cars is not on the agenda of the Beijing summit at all. Commerce Secretary Howard Lutnick has also previously ruled out Chinese investment in the U.S. auto sector.
Nevertheless, there are still concerns in the industry that Trump, who constantly talks about wanting to attract more auto plants to the U.S., may still leave himself room for maneuver.
The auto industry’s fears are reinforced by the situation overseas. U.S. companies don’t want a repeat of the scenario in Europe and Mexico, where Chinese brands are rapidly gaining market share thanks to low prices.
In Europe, the share of Chinese brands doubled to 6% last year, and reached 14% in Norway, 9% in Italy, 11% in the UK and 9% in Spain. There are already 34 Chinese car brands sold in Mexico, with about 15% of the market.
That said, the US market is particularly vulnerable: the average price of a new car in the US exceeds $51,000, and cheaper Chinese models can quickly attract buyers amid the car affordability crisis.
