Trump keeps bringing this up:
There are a few answers to that question:
- There are a some, not many. The most obvious is Volvo, which Ford sold to Chinese automaker Geely in 2010.
- Most Chinese cars in the U.S. these days are made by U.S. car companies in China, including some Cadillacs and Buicks, so it’s invisible to the consumer. And according to U.S. News, Ford is (or was) planning on moving production of its Focus model from Mexico to China next year. So if Trump raising tariffs on Chinese-made cars forces U.S. automakers bring jobs back to the U.S., that part of it is potentially a good thing.
- They’re coming. But are they a threat? Who knows? There’s no guarantee of success in the U.S. auto market no matter what the tariffs, or price, or value. Japanese car makers initially succeeded despite tariffs because their cars were inexpensive and held up a lot better than the American cars being put out at the time. South Korean car makers had zero progress gaining a foothold in the U.S. market until they introduced 100,000 mile warranties.
So Trump might be right in a way to focus on cars when discussing tariffs on China, even though his timing in raising the alarm may be a bit premature.
There’s another issue that ties into this, the announcement by Trump’s favorite bad boy, EPA Chief Scott Pruitt this week that the Trump Administration intends to roll back emissions and fuel efficiency standards on cars, and at the same time fight federal law that allows California to set its own more stringent standards that other states can then follow.
Thing is, that would imply a high level of protection for U.S. automakers indefinitely. Because while they may no longer be held to higher standards, unless laws and targets start unraveling all over the place, manufacturers in Europe, and Japan, and yes, China will invest and will produce vehicles that meet more ambitious goals. So either U.S. automakers will either have to keep up anyway to compete globally, or will return to a period of inefficiency compared to the rest of the world, meaning in order for them to succeed, the government will have to keep keeping the rest of the world out. Socialism, anyone?