They may come anyway, despite considerable tariff and regulatory barriers. But inviting them in would be a mistake.
President Donald Trump was in Michigan this week, making the case in a speech at the Detroit Economic Club that his administration’s policies have spurred a “Trump economic boom.” We’ve seen enough of the president over the years to know he doesn’t meticulously stick to the teleprompter during his speeches, and his address on Tuesday was no different. What’s more, as this was in Detroit, you know he talked about cars.
But not just American cars. Chinese cars. Reports Barron’s:
His talks were far-ranging, and his message to executives and investors was similar to past statements: He wants car companies to build in America, even if they are Chinese.
“Let China come in,” said Trump at one point, a statement that might raise eyebrows for American auto executives. China has low-cost sources of parts and labor, and its BYD is now the largest seller of all-electric cars globally, topping Tesla for the first time in 2025.
Now, the president hasn’t said anything about reducing tariffs on Chinese auto imports, which he mentioned favorably in Michigan. They were raised to 100% during the Biden administration, and Trump placed an additional 25% tariff on all auto imports after his return to office. There’s also a Commerce Department rule in place that will bar Chinese software and hardware in automobiles; it’s set to take effect next year. Both are considerable hurdles to Chinese auto imports. The president appears focused on locating production inside the United States, no matter who owns the factory.
But we should pump the brakes on that (pun intended). Chinese auto companies ultimately answer to the Chinese Communist Party and no one is driving analog cars these days; modern automobiles are connected. The reason that connected vehicle software and hardware ban is coming is because there are security risks inherent in the widespread adoption of Chinese-made ones. Not to get all paranoid but wiring a car with that stuff and connecting it to wifi could allow it to serve as a listening device, a vector for malware, or simply enable it to be turned on or off. That’s why the Alliance for American Manufacturing (AAM) applauded the Commerce rule when it was announced.
What’s more, we’ve warned about what a flood of heavily subsidized Chinese vehicles would mean for the millions of American jobs supported by automobile manufacturing. An auto assembly plant making Chinese vehicles in Michigan would add those assembly jobs, but displace U.S. supply chains with Chinese ones. And, by a wide margin, most jobs in the American automotive industry are in auto parts manufacturing.
This is import competition that our government should not invite. AAM wrote in a 2024 report that “the introduction of cheap Chinese autos – which are so inexpensive because they are backed with the power and funding of the Chinese government – to the American market could end up being an extinction-level event for the U.S. auto sector, whose centrality in the national economy is unimpeachable.” That remains true. But despite those aforementioned considerable hurdles to Chinese autos that subsequent U.S. administrations have erected, Chinese autos may still come anyway; the Wall Street Journal reported last week that Chinese auto giant Geely, which owns the Volvo brand and has a South Carolina assembly plant, is considering expanding into the U.S. in the next few years.
(Geely communications chief Ash Sutcliffe) said that Geely would work with the regulatory environment in the U.S. “As a global company, it’s your duty to follow these rules and regulations,” Sutcliffe said of the software ban.
You can read our 2024 report on the threat of Chinese auto imports here.