Chinese cars... A joke there...

Trump’s attacks on Chinese cars strike a chord — with both parties

The former president’s violent “word salad” aside, Rep. Haley Stevens (D-Mich.), said the “more aggressive we can be” on tariffs, the better.

By TANYA SNYDER

Former President Donald Trump’s pledge to slap a 100 percent tariff on Chinese vehicle imports aligns with a rise in anxiety in Washington about the growing might of Beijing’s auto industry — with both Democrats and Republicans clamoring for drastic steps to save American jobs.

Trump’s tariff threat — part of a “bloodbath” tirade that roiled the presidential race last weekend — came just nine days after Democratic senators had urged the Biden administration to consider increasing the United States’ tariffs on Chinese-made cars. Republican lawmakers have also called for trade penalties against vehicles from China, including Missouri Sen. Josh Hawley’s proposal last month to add a 100 percent tariff to the 27.5 percent levy that has been in place since Trump’s presidency.

Democrats are condemning the violent rhetoric of Trump’s speech on Saturday, saying it demonstrates once again the danger he poses to American democracy. But they’ve been less quick to distance themselves from his call for higher tariffs, amid concerns that an influx of cheap Chinese electric vehicles could decimate the U.S. auto industry — even if they don’t want him anywhere close to the Oval Office again.

“The more aggressive we can be, in my opinion, the better,” Rep. Haley Stevens (D-Mich.) told POLITICO, adding that she is looking to the Biden administration to determine where to set tariffs. “I just am not taking my cues from Donald Trump, who’s firing off a word salad from the mouthpiece of his podium on the campaign trail when he’s shown he’s never known what he’s talking about as it pertains to [the] auto industry.”

During a campaign stop in Ohio, Trump vowed to enact policies that would keep imported Chinese cars out of the U.S. and protect autoworkers’ jobs. He also cited recent news reports that the giant Chinese electric car manufacturer BYD is planning to open a plant in Mexico, in what many auto analysts believe could be a long-term play for the U.S. market.

“No,” Trump said. “We’re going to put a 100 percent tariff on every single car that comes across the line and you’re not going to be able to sell those cars.”

In an interview, Rep. Debbie Dingell (D-Mich.) echoed Trump’s concerns about BYD’s Mexico plans, and called for higher tariffs on China’s automakers, which both U.S. and EU officials have accused of being heavily subsidized by the Chinese government.

“I really, really, really, really, really am going to be intense about ensuring that automobiles made by China aren’t going to get any benefit from trade agreements that we’ve got,” said Dingell, who is absolutely no Trump fan. “So, you know, producing in Mexico and coming in here.”

Sen. Sherrod Brown (D-Ohio) similarly told POLITICO that the U.S. must block China from bringing “its government-backed cheating to the American auto industry.” He said he favors increasing tariffs, but would not specify by how much and didn’t explicitly endorse Trump’s idea.

“Ohio knows all too well how China illegally subsidizes its companies, putting our workers out of jobs and undermining entire industries from steel to solar manufacturing,” Brown said in a statement. “We can’t wait for China to run this same playbook in the auto industry — we need strong rules, including but not limited to tariffs, to stop a flood of Chinese electric vehicles that threaten Ohio auto jobs.”

Brown’s comments echo those of a March 7 letter he wrote with two other Rust Belt Democrats, Sens. Gary Peters and Debbie Stabenow of Michigan, asking the Biden administration to “maintain or increase” existing tariffs on Chinese autos and examine the national security threat posed by high-tech, highly connected Chinese vehicles.

“Artificially low-priced Chinese EVs flooding the U.S. would cost thousands of American jobs and endanger the survival of the U.S. automotive industry as a whole,” the senators wrote.

Hawley went even further in February, offering his own 100 percent tariff proposal. And Sen. Marco Rubio (R-Fla.) has written a trio of bills taking aim at Chinese EVs that would slap a flat $20,000 tariff on Chinese vehicle imports and seek to close import loopholes.

The Biden administration, which is working on an overdue review of tariffs Trump imposed on a raft of Chinese goods, said it’s examining the concerns about Beijing’s electric vehicles.

“We are clear-eyed that China has developed and implemented a plan to target the EV sector for dominance through a wide and evolving range of non-market based policies and practices to benefit China’s EV and EV battery companies,” a spokesperson for the Office of the U.S. Trade Representative, Angela Perez, said in a statement to POLITICO.

Perez also emphasized that the agency is “closely monitoring Chinese automotive investments in Mexico.”

China’s biggest threat: Price

These warnings come as the Chinese auto industry is poised to compete on quality — and win on price — in a way it never has before.

BYD, a Chinese EV manufacturing behemoth that most Americans have never heard of, overtook Tesla as the world’s biggest producer of electric vehicles. China has surpassed Japan as the world’s biggest auto exporter, selling both EVs and gasoline-powered cars around the globe. With the global auto industry transitioning to electric, China is poised to leapfrog the competition.

China also controls 85 percent of the processing of critical minerals needed for the manufacturing of electric vehicles worldwide — posing a growing challenge to Biden’s efforts to foster a domestic EV industry that would create American jobs and lessen climate pollution.

Cheap prices are an especially acute potential threat for a U.S. electric vehicle market that has largely focused on higher-end models — and where even the sticker prices of gasoline-powered cars and trucks have soared beyond many Americans’ comfort zones in recent years.

Though EV prices are finally dropping, as of July 2023 the average price of an electric vehicle in the U.S. hovered around $53,000. Meanwhile, Chinese consumers can select from a range of cheap EVs, including BYD’s Seagull hatchback, which costs $11,000.

That is inspiring fears among industry advocates and policymakers who foresee China wielding the same playbook that has undermined entire realms of U.S. manufacturing, including drones and solar panels.

China also needs more overseas markets: As its own economy slows, Chinese automakers are sitting on an excess inventory of as many as 10 million electric vehicles. They’re looking for places to offload it, and the United States market is the holy grail.

For now, the existing 27.5-percent tariff on Chinese-made vehicles, including 25 percent imposed by the Trump administration, has largely kept them at bay. One notable exception is the Sweden-based luxury EV manufacturer Polestar, which is majority-owned by a Chinese company and sells cars in the U.S. that were made in China — though it has announced plans to open a manufacturing plant in South Carolina.

Lawmakers, and the auto industry, worry that it’s only a matter of time before China establishes a beachhead inside U.S. markets.

U.S. auto sector is watching warily

The trade group Alliance for American Manufacturing called Chinese EV encroachment an “extinction-level event for the U.S. auto sector.” The group — which primarily represents steelworkers — is also calling on the Biden administration to stiffen tariffs and close potential loopholes, among other things.

One U.S. auto industry executive, granted anonymity to discuss sensitive business matters, said the price gap is the most concerning threat.

He said the average price gap between a Chinese vehicle and its U.S.-made counterpart ranges from 44 percent to 179 percent. “That is a massive gap,” the executive said. “Tariffs alone aren’t going to take care of that.”

Still, while Chinese automakers’ “exponential growth trajectory” is a concern, he said his company is not lobbying aggressively on the issue. “It is our responsibility to really keep an eye on all of our competition, whether it’s Chinese, whether it’s European, whether it’s Korean or Japanese,” the executive said.

Where the auto lobby is asking anything of the government, it’s just status quo. In March, Matt Blunt, president of the American Automotive Policy Council, called to maintain the Trump-era tariffs on Chinese goods, saying they’re “the only reason” there hasn’t been a flood of Chinese imports out-competing U.S. vehicles yet.

“So it’s important that government policy work to set a level playing field,” he added.