Invest2 publishers3 min readPublished
Days before the Xi summit, Trump says he would accept a Chinese-owned car plant in the US
Detroit's protection against Chinese carmakers rests on a regulation from early 2025, and the industry wants a statute instead by the end of December, roughly three months after Trump and Xi are due to meet.
The Investor · Invest desk
What happened
- Trump said in a Fox News interview on the 11th that he would be fine with Chinese automakers coming into the United States to build car plants, Reuters reported on the 13th.
- He drew the line at Chinese automakers building in Mexico and shipping finished vehicles north, and said he was not knocking Chinese cars.
- The Alliance for Automotive Innovation, whose members include General Motors, Ford, Toyota, Volkswagen, Hyundai, Honda and Stellantis, asked Congress to pass a permanent bar by the end of December.
- Kyodo News reported that China has told the United States it could shelve the summit altogether if Washington approves new arms sales to Taiwan.
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Why it matters
- decision Congress has to decide whether to pass the permanent bar it was asked for, on a timetable that runs about three months past the date Trump and Xi are due to sit down.
- exposure The bar on Chinese carmakers is a regulation and not yet a law, so the protection American automakers rely on is something the two presidents can negotiate over.
- constraint A Chinese carmaker that wants to sell into the US on these terms has to build inside the country, since Trump ruled out assembling in Mexico and exporting north.
- capability Local assembly would give a Chinese carmaker a route into the market that the tariff schedule cannot reach, so the duties become beside the point once a plant exists.
Duties of more than 100% on Chinese electric vehicles [7] more than double the cost of a car at the border, and they leave a car assembled inside the United States untouched [1]. What stops the factory is the rule the Biden administration imposed in early 2025, which reaches building as well as selling [6]. So the thing Trump floated on Fox News is a change to a regulation. The group speaking for the industry has taken its own request to Congress, and it wants Chinese vehicles permanently barred by law before the end of December [8].
"Right now, Chinese automakers are dumping subsidized vehicles with connected software and hardware around the world," John Bozzella, the Alliance for Automotive Innovation's chief executive, said in a letter to congressional leaders [10]. The letter cited unfair trade practices, subsidies and intellectual property violations in China's auto industry as a serious threat to the American industry [11]. It went out roughly three weeks before the scheduled meeting with Xi [4].
Trump's own sentences that week point in two directions. "If China wanted to come in and open a plant to build their cars here, I'd be OK with that," he said on Fox News programme "The Ingraham Angle" [2], adding that "Japan does it, but they hire our people. The big thing is they hire our people" [3]. To Reuters' account he put the same point as jobs: "The most important thing is that Americans get jobs" [4].
Then the denial. Senator Elissa Slotkin, a Michigan Democrat, said on Wednesday there were "rumors that Trump is planning to allow Chinese cars to be sold in the U.S., as part of a larger deal he's putting together. That would be a strategic mistake" [12]. Trump called her statement a "total phony rumor" and said he had kept Chinese vehicles out of the United States [13]. The 2025 rule covers imports and domestic assembly alike [6].
The meeting itself was about ten days off as of the 13th on the Seoul Economic Daily's count [15], and two weeks off as of Friday on NBC's [14], which puts it in the second half of September [2]. Officials are weighing whether to fold AI into the high-level preparatory talks held days before the summit, multiple sources told the South China Morning Post [16]. Trump and Xi agreed at a Beijing summit in May to pursue a government-to-government dialogue channel on AI [17], and the SCMP report said separate high-level talks devoted to AI have become harder to schedule as the date closes in [18].
I would put more weight on the December date than on the interview. The Alliance asked for a permanent statutory bar, and a statute is harder for a president to trade away than a regulation [8]. The case against that reading is that nothing has moved: a president said he would be fine with a plant nobody has proposed, and he maintains he has kept Chinese vehicles out [13]. The 2025 rule settles which reading was right. If it is intact in January and the bill has passed, the Fox interview changed nothing; if it is amended and a Chinese carmaker names a US site, the industry's protection was a summit concession.
What to watch
- Whether Congress votes on the permanent statutory bar before the Alliance's end-December target.
- Any amendment or waiver of the early-2025 regulation that blocks Chinese automakers from building passenger vehicles in the US.
- Whether any Chinese automaker names a US site, and how much capital it commits to it.