Lead-in

Introduction

"Chinese cars are expected to make their way into the U.S. market within the next 5 to 10 years."

"Rumors are circulating that Trump is considering allowing Chinese cars to be sold in the U.S. as part of a broader trade deal he's negotiating," recently wrote U.S. Senator Elissa Slotkin, a Democrat from Michigan, on X.

She deemed this potential move a "strategic blunder" that would "irreversibly affect" 1.2 million auto-industry-related jobs in Michigan, as well as the broader U.S. manufacturing sector.

Slotkin did not reveal the source of these rumors, and the White House has not announced any plans to ease trade restrictions on Chinese cars.

Notably, while issuing this warning, Slotkin also promoted her proposed Connected Vehicle Security Act, which seeks to ban Chinese cars, software, and hardware from the U.S. market. Concurrently, auto industry lobbying groups and the United Auto Workers (UAW) are pressuring Congress to pass this legislation.

Consequently, some analysts view this unsubstantiated "rumor" as political posturing. With a fiercely contested Senate election looming in Michigan, Democrats stand to gain significantly by portraying themselves as defenders of auto workers and Trump as the one betraying them.

This tactic is particularly astute in Michigan, where the auto industry is a cornerstone of the economy.

Just days ago, the U.S. government, citing national security concerns, urged Ford Motor Company to reduce its reliance on Chinese manufacturing and technology partners, emphasizing the need to prioritize American workers and domestic production.

However, Ford CEO Jim Farley has consistently maintained that the U.S. auto industry, including Ford, must compete directly with Chinese automakers, noting that Chinese brands cannot be indefinitely excluded from the market.

01 Declining Employment in the U.S. Auto Industry

The crux of the aforementioned information centers on employment for auto workers. Yet, a recent report by Automotive News highlights that despite Trump making U.S. manufacturing a cornerstone of his administration and aiming to boost jobs through sweeping tariff policies, employment in the auto manufacturing sector has actually declined, according to data from the U.S. Bureau of Labor Statistics.

"Manufacturing is thriving!" Trump declared on the social media platform Truth Social on August 4. "Trillions of dollars in new investments are flooding into the U.S., promising more factories, construction projects, and high-paying jobs. The results are undeniable."

However, the reality for the auto parts manufacturing sector is more nuanced. Preliminary data from the U.S. Bureau of Labor Statistics reveals that employment at U.S. auto and parts factories dipped by about 1% in July, to 964,500, down from 975,300 in March 2025 (before the new tariff policies took effect). Both figures are adjusted for seasonal variations.

These statistics undermine Trump's primary objective of using tariffs to revive manufacturing jobs. In truth, manufacturing employment has decreased, largely due to layoffs by parts suppliers, as the industry increasingly relies on automation and adjusts production to counter rising costs.

The latest jobs report, released on August 7, underscores a dilemma facing Trump and his administration: To bolster manufacturing capacity and jobs in the U.S., they have imposed tariffs on auto industry companies. Yet, over the past year, these policies have led to a slight net loss of jobs in the auto manufacturing sector, encompassing layoffs, resignations, retirements, and hiring freezes following departures.

"The auto industry has been severely impacted by tariffs," stated Frank Manzo, an economist at the Midwest Economic Policy Institute. "While some companies may benefit from protection, many others will suffer from increased costs."

Moreover, tariffs are not the sole factor at play. The slower-than-anticipated adoption of electric vehicles has dealt a significant blow to suppliers, as the costs of retrofitting equipment have failed to yield the expected return on investment. The conflict in Iran has driven up oil prices and their derivatives, subsequently raising manufacturing costs across various industries.

Preliminary data indicates that employment at auto parts suppliers fell by 13,000, or 2.5%, in June compared to the previous year, signaling that the U.S. is still grappling with the repercussions of tariffs and the sluggish adoption of electric vehicles.

The latest state-level labor market data paints a more intricate picture than one of mere prosperity. In the year ending June 2026, Michigan lost approximately 4,000 auto parts manufacturing jobs, a decline of about 3.5%; overall manufacturing jobs decreased by about 7,000, a decline of about 1.2%.

Although employment in the auto assembly and parts industries has gradually rebounded from the lows of the last recession, some counties still have employment levels below previous peaks, even as production shifts from internal combustion engine vehicles to electric vehicle projects.

According to data from the U.S. Bureau of Labor Statistics, employment in the U.S. auto industry has been steadily declining at a rate of about 1% to 2% per year since 2001, and this decline is projected to accelerate in 2025 and 2026, with expected year-over-year decreases of over 3% and 2%, respectively.

02 How Some Chinese Cars Made Their Way In

There is a prevailing belief that U.S. barriers primarily target retail sales rather than the vehicles themselves. A prime example is Waymo, which, since 2024, has cleverly circumvented the U.S. Department of Commerce's "Connected Vehicle Final Rule" by importing over 3,200 CM1e electric vans manufactured by Zeekr, a brand under China's Geely Group, through the Port of Los Angeles.

The division of labor is straightforward: Zeekr is responsible for providing traditional automotive hardware, such as the body, chassis, battery, and electric drive systems, and completes vehicle manufacturing in China. Upon arrival in the U.S., Waymo integrates core hardware and software related to connectivity, computing, and autonomous driving at its factory in Arizona.

Why does Waymo go to such lengths? The answer lies in the lack of domestic manufacturing capacity for new energy vehicle hardware in the U.S. Industry insiders estimate that even with a 100% tariff, the cost of vehicles customized by Waymo in Ojai may be less than half of its current mainstay model, the Jaguar I-Pace.

For a company planning to deploy thousands or even tens of thousands of vehicles, the savings per unit will ultimately translate into hundreds of millions of dollars in profit. However, cost is not the sole motivator. What Waymo truly cannot overlook is the systemic capability of China's new energy vehicle industry.

A vertically integrated supply chain encompassing batteries, electric drives, electronic controls, and thermal management; a platform architecture supporting rapid development of derivative models, such as Zeekr's SEA architecture; and an astonishing iteration speed, with a new model launched every 12 to 18 months. These three factors combine to endow Waymo with a unique ability to swiftly customize vehicles for non-traditional customers.

Thus, Waymo requires more than just an automaker; it needs a sufficiently agile supply chain capable of responding to its technological integration needs, which traditional automakers like BMW, Chevrolet, and Hyundai's electric platforms currently struggle to provide. Moreover, BYD continues to operate a bus factory in California, which has been in operation since 2013.

While U.S. politicians are still debating how to further restrict Chinese electric vehicles, the U.S. auto industry has already begun to adapt. Ford's Jim Farley has even discreetly assembled a "Skunk Works" team of over 350 people tasked with developing a cost-competitive and affordable platform from scratch to compete with Chinese electric vehicles.

This urgency stems from a harsh reality: The so-called "catch-up time" afforded by Washington's "wall" has not been effectively utilized by traditional U.S. automakers. Instead, they have fallen deeper into the quagmire of electrification. Jim Farley has stated that he expects Chinese cars to arrive in the U.S. within the next 5 to 10 years.

Conversely, in the southern U.S., many Americans are purchasing affordable, high-spec Chinese cars in Mexico and utilizing old regulations on temporary entry across the U.S.-Mexico border to drive them back to the U.S. In the north, Canada has begun receiving the first batch of the 50,000 Chinese-made electric vehicles allowed annually under a new agreement between the two countries. If these cars are registered in Canada, they can also be legally driven on U.S. roads.

U.S. media outlets state that consumers are not overly concerned about where a car is manufactured; they prioritize price and value for money. Chinese cars precisely meet these two criteria, so whether ready or not, they will inevitably enter the U.S. market. Telling people what they cannot have is destined to backfire for policymakers.

The phenomenon of "forbidden fruit" will emerge. If the U.S. government ran advertisements encouraging Americans to buy Chinese cars, people might ignore them; but when the government tells people they can't have them—especially when some are currently attempting to completely ban Chinese car imports under the guise of "national security"—it only stimulates demand.

Editor-in-Chief: Yang Jing Editor: He Zhengrong

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