On a Collision Course: China’s Existential Threat to America’s Auto Industry and its Route Through Mexico

In February 2024, Chinese auto giant Build Your Dreams (BYD) unveiled a fully electric crossover sport utility vehicle priced at an astonishingly low $14,000. News of this ultra-cheap electric vehicle had the auto industry media abuzz, with one outlet declaring that “Americans would eat this up” and that the vehicle would “sell like hotcakes.”

But there is always a cost. In this case, it very well may be the U.S. auto industry.

The Takeaways

  1. The introduction of cheap Chinese autos to the American market could end up being an extinction-level event for the U.S. auto sector, which is an essential industry in the United States.

  2. China's government utilized a litany of unfair practices, including the use of forced labor, to build its auto industry. Artificially cheap Chinese autos are now flooding the global marketplace, and the U.S. has missed the worst of it only because of tariffs currently in place.

  3. Chinese automakers like BYD are building facilities in Mexico to find new routes into the United States. U.S. policymakers must respond to counter this threat, including by deploying trade enforcement tools, correcting loopholes in the United States Mexico Canada Trade Agreement (USMCA), eliminating forced labor from the auto supply chain, and strengthening American-made incentives and procurement policies.