It’s a step forward, but countering China’s auto threat will be massive, marathon climb that requires both industrial investment and proactive trade policy.
Vice President Kamala Harris announced more than $100 million in new funding and resources for small- and medium-sized auto manufacturers during a speech in Detroit on Monday. The announcement comes as the Biden administration aims to establish America as a global leader in electric vehicle (EV) manufacturing.
And yet the U.S. auto industry and the millions of American workers it employs continue to grapple with a ticking time bomb in the form of cheap Chinese-made EVs, the first of which is set to enter the U.S. market this summer.
“The strength of America’s economy is also based on the strength of America’s supply chains,” Harris said. “We all learned that in the pandemic, if it weren’t clear before. This investment will help to keep our auto supply chains here in America, which strengthens America’s economy overall, and keep those jobs here in Detroit.”
As Harris announced, the Department of Energy (DOE) will provide $100 million to support auto manufacturers as they convert from internal combustion engine parts and kickstart production in the EV supply chain, and the Small Business Administration has created a new lending program geared to these manufacturers. These funding opportunities follow the Inflation Reduction Act’s $55.1 billion investment in U.S. battery manufacturing and $16.1 billion for EV factories, an effort that has paid off so far.
Since President Biden took office, private companies have announced more than $170 billion in investment in EV and battery manufacturing, according to the White House, and the auto industry has gained more than 90,000 jobs.
But, as Bloomberg puts it, “the biggest transformation of the auto industry in a century is underway.” The problem is that China has long had a head start in an economy divorced from true market forces, making millions more EVs than Chinese consumers demand.
Since 2001, Beijing has set its sights on dominating the global electric vehicle market, identifying the technology as a top priority in its tenth Five-Year Plan that year. The Chinese government has kept its automakers and manufacturers throughout the EV supply chain, which is inextricably enmeshed with the state’s Uyghur forced labor program, awash with government funding. Pitting Made in America EVs against Chinese-made rivals will never be a fair game.
The Biden administration’s most recent funding announcement plays a role in ensuring that the U.S. auto industry transitions to an EV future without compromising community-supporting factory jobs, but it’s past time for the United States to get serious about protecting our burgeoning EV industry. America must pair industrial investment in U.S. EVs with strong, proactive trade policy. That means imposing exclusionary tariffs on all Chinese auto imports, even to the point of a ban.
Here are Alliance for American Manufacturing President Scott Paul’s thoughts as shared in a recent NPR story:
“We’ve seen this play out in the past in other industries,” he says. “We need to get ahead of this instead of responding to it after the fact, when we’re just cleaning up the mess and we’re seeing these factories wiped out, these jobs displaced and these communities devastated.”