- A bipartisan group of senators has proposed a bill that would ban Chinese-built cars from the U.S.
- Several policies already lock them out, for the most part, but the issue is complicated.
Democratic Sen. Elissa Slotkin of Michigan and Republican Sen. Bernie Moreno of Ohio have jointly introduced legislation that would ban Chinese automakers from the U.S. Reuters reports, “The bill has significant momentum and a House version now tops 100 cosponsors, while automakers and legislative aides hope to win passage this year.”
The proposal comes as President Trump and Chinese President Xi Jinping hold a high-profile summit at the White House this week. Trump has recently signaled openness to Chinese automakers opening factories in the U.S.
But American automakers are deeply concerned that they won’t be able to compete with Chinese rivals that have significant government support, lower prices, and advanced technologies their U.S. counterparts haven’t mastered.
How China Has Taken Over
- China now has the world’s most successful auto industry.
- Lower costs, domestic supply chains, and government support for industry helped get it there.
China has grown into the epicenter of the global car trade.
The Chinese now build, buy, and export more cars than any other nation on Earth. The Chinese government closely controls the country’s economy, planning economic development in 5-year sprints.
Its latest 5-year plan includes government support for two key technologies that give it global influence – green energy and electric cars. Bloomberg explains, “China’s 15th 5-year plan, released Sept. 11, sets a 70% EV and hybrid share of new-car sales by 2030.”
The country now provides solar and wind energy infrastructure to many countries, helping some wean off fossil fuels and others develop their first modern infrastructure by skipping the fossil-fuel stage entirely. It then helps use that electricity infrastructure to power cars. A recent report from the International Energy Agency found that Nepal, with its newly developing infrastructure, is the country with the second-highest concentration of electric vehicles (EVs).
China has lower labor costs than the U.S. and large domestic sources of the minerals necessary for EV batteries. That allows its companies to build EVs affordably.
Once Chinese automakers enter a country’s market, they can quickly grow to dominate it.
The U.S., meanwhile, has little government support for an electric car industry. Last year, the White House eliminated a tax subsidy that helped Americans buy EVs.
American EV sales had briefly topped 10% before the rebate disappeared. Today, they sit below 6% of the U.S. market, while globally they make up more than 25% of all new cars.
How Chinese Cars Are Different
- China’s EV-first auto industry has technologies not seen anywhere else.
Chinese automakers specialize in EVs, which are mechanically simpler than gas-powered cars. They ride on “skateboard platforms” – nearly-flat combinations of batteries, motors, suspension, and steering components that can be scaled up or down so that designers can use the same parts to build many different sizes and types of vehicles.
Most automakers globally now have an EV skateboard platform. Ford’s Universal EV Platform, for instance, will power half a dozen new vehicles in the coming years, the company says, starting with its low-priced Fathom pickup.
But China’s companies, lacking large-scale legacy gas-powered cars, have gone all-in on the technology. They have pushed into new battery chemistries, including promising solid-state batteries, before the rest of the world.
At least two Chinese automakers, BYD and Geely, have developed charging technology that can fully recharge a battery in about five minutes.
They can develop and produce new designs in just two years, while American companies typically need five years or more to go from a fresh idea to a new car in showrooms.
With the propulsion system well-developed and largely computer-controlled, Chinese companies now compete to develop new technologies not seen outside the country. The Nio ET9 SUV shakes snow off itself like a dog. Geely’s upcoming Battleship 700 SUV reportedly floats and uses propellers to move itself through the water.
What the Rules Say Now
- High tariffs and software rules prevent Chinese automakers from selling here today.
Chinese cars are largely locked out of the American market today by several policies.
Tariffs as high as 100% would erase the price advantage, making it impractical for Chinese automakers to sell here.
A Biden-era policy blocks automakers from using Chinese-derived software on national security grounds.
The latter forced startup Polestar, owned by Geely, out of the U.S. market starting in 2027.
Geely also owns Volvo, which won an exception earlier this year, allowing it to continue operations in the U.S. Volvo builds many of the vehicles it sells here in South Carolina.
Why the Proposed Law Might Fail
- The White House could block the measure, and rules over foreign ownership could draw opposition from established automakers.
The law has bipartisan support, but that doesn’t guarantee passage.
Reuters cites a “congressional aide” to report that, “A couple of Republican senators have already raised some concerns.”
Chinese investors own partial stakes in many established automakers. An early version of the bill would have blocked even Mercedes-Benz from the U.S.
Even President Trump could oppose the measure. Reuters notes, “On Sept. 8, Trump told Fox News he would accept Chinese car companies building cars in the United States, sparking alarm among automakers.”
Some U.S.-based automakers, meanwhile, have sought to partner with the Chinese to learn from their advantages. A recent Ford-Geely agreement will see the two companies jointly operate a factory in Spain to produce cars for the European market.
The situation recalls a 1980s trade dispute in which American automakers objected to the presence of Japanese companies in the U.S. market. In that dispute, the Reagan administration ultimately negotiated temporary quotas on Japanese cars in the U.S. in exchange for technology-sharing agreements that let American automakers learn from their Japanese counterparts.
99.4% of Proposed Bills Never Become Law
- An overwhelming majority of proposed bills die quietly.
The simple inertia of politics could also interfere. Most bills never come close to passage.
In the current session of Congress, a KBB analysis finds, members have introduced roughly 19,300 bills. Just 1,900 have reached a floor vote in either house. Just 112 — 0.6% — have been enacted into law. Many of those are symbolic gestures only, such as measures to name a post office.
