Industry insiders agree with former President Donald Trump’s suggestion that China is looking to annihilate American auto manufacturing on President Joe Biden’s watch.
During a speech in Ohio on Saturday, Trump warned Chinese President Xi Jinping that if he is reelected in November, China’s premier automakers will not be allowed to export their cheap Electric Vehicles (EVs) to the United States market without facing massive tariffs.
Most recently, reports circulated that China’s BYD is planning to build EV plants in Mexico to export the cars to the United States at low prices — thus drowning American-made competitors and dominating the EV market.
Trump said Biden’s allowing China to do so would be a “bloodbath” for American auto workers.
“Let me tell you something to China, if you’re listening President Xi — and you and I are friends but he understands the way I deal — those big, monster car manufacturing plants that you’re building in Mexico right now, and you think you’re going to get that and you’re going to not hire Americans and you’re going to sell the cars to us, 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 if I get elected. Now if I don’t get elected, it’s going to be a bloodbath for the whole, that’s going to be the least of it, it’s going to be a bloodbath for the country; that’s going to be the least of it. [Emphasis added]
Several industry insiders have agreed with Trump, including auto workers.
In January, Tesla CEO Elon Musk said if the U.S. does not hit China’s EVs with huge tariffs, the Chinese Communist Party (CCP) will have “pretty much delomish[ed]” the American auto industry.
“The Chinese car companies are the most competitive car companies in the world … so, I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established,” Musk said on a Tesla earnings call:
Frankly, I think, if there are not trade barriers established, they will pretty much demolish most other companies in the world. [Emphasis added]
In February the Alliance for American Manufacturing (AAM) issued a report detailing an “extinction-level event” for American auto workers should Biden allow China to export cheap EVs to the U.S. market.
“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,” AAM experts write:
More alarming, however, are Chinese firms’ heavy spending on plants in Mexico, through which they can access the United States by way of the more favorable tariffs under the United States-Mexico-Canada Agreement (USMCA). This strategy is, in effect, an effort to gain backdoor access to American consumers by circumventing existing policies that are keeping China’s autos out of the U.S. market. [Emphasis added]
This is an auto industry backed by the Chinese state. It has invested heavily in foreign markets in order to access more of them. And there is cause for alarm that Chinese vehicles and parts will only increase their access to the U.S. market, overcoming existing tariffs and evading existing trade enforcement measures, to directly challenge domestic automakers and threaten the jobs of millions of American manufacturing workers. [Emphasis added]
Like Trump, AAM experts list hiking tariffs on China as the number one policy prescription for preventing the American auto industry from facing extinction.
“Impose exclusionary tariffs on all Chinese automobile imports to the United States, including both EVs and internal combustion engine vehicles,” the AAM report lists as one of its “Policy Recommendation.” “This could be accomplished through the existing Section 301 tariffs, imposed in 2018 and currently under review, or by way of launching a new investigation under Section 301 or other U.S. laws.”
At the start of the year, the United Auto Workers (UAW) submitted comments to U.S. Trade Representative (USTR) Katherine Tai urging her to increase tariffs on foreign cars, including EVs.
UAW President Shawn Fain wrote to Tai:
The UAW is calling to specifically increase [most-favored nation] tariffs rates on automobiles and automotive parts, particularly electric vehicles and related components. The United States is clearly out of step with the rest of the world in only having 2.5% [most-favored nation] tariff rates on light vehicles and components. Given the current overcapacity of electric vehicles and electric vehicle components, a temporary or permanent increase in the rate would create space for the nascent electric vehicle industry to domestically take root. [Emphasis added]
Ford Motor Co. executive Marin Gjaja has expressed immense concern over the China threat mentioned by Trump over the weekend, Bloomberg reported:
“They are ahead of us in this technology,” Marin Gjaja, chief operating officer of Ford’s EV unit, Model e, said Wednesday. “We look at that and say, ‘That’s coming here eventually, so we’d better get fit now and better get going on EVs or we don’t have a future as a company.’” [Emphasis added]
Gjaja said the potential for cheap China-made EVs in the American market is a “colossal strategic threat” to the American auto industry, including Ford.
The Economist and the Financial Times published pieces in the last few months warning of a similar impact should Biden not take any action.
“Chinese carmakers are making inroads in Mexico, a country with a free-trade agreement with America … as long as the putative factories used enough locally made parts, their output would escape America’s prohibitive tariffs,” The Economist reported in January.
Even lawmakers in Washington, DC, often considered the least proactive, have lobbied the Biden administration to end U.S. free trade with China altogether as a warning that American leaders will not tolerate unfair trade practices at the expense of the nation’s working and middle class.
“Congress should move [China] to a new tariff column,” Rep. Mike Gallagher (R-WI), chair of the House Select Committee on the CCP, wrote, “that restores U.S. economic leverage to ensure that [China] abides by its trade commitments and does not engage in coercive or other unfair trade practices and decreases U.S. reliance on [Chinese] imports in sectors important for national and economic security.”
John Binder is a reporter for Breitbart News. Email him at [email protected]. Follow him on Twitter here.
