Chinese cars are coming — how TikTok and the '90s could shape U.S. rollout
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With Chinese cars closing in on America, Washington might draw from China's own playbook to try to limit the threat to the U.S. domestic industry.
Why it matters: China used to copy American cars. Now, Chinese vehicles are as good or better than U.S. models, and cheaper, too.
- Automakers fear that low-cost Chinese models, already exported around the world, will soon take over American driveways as well.
Catch up quick: Chinese cars will soon be driving both north and south of America's borders.
- Canada slashed tariffs on imported Chinese EVs last week as part of a broader trade deal, marking China's official entrance there.
- Mexico just raised tariffs on Chinese cars to 50%, but it could be too late. They've already taken 20% of the market.
President Trump, reacting to the Canada deal, told reporters last week that he would welcome Chinese automakers to build factories in the U.S. too — as long as they hire American workers.
Threat level: Not everyone is as enthusiastic about opening America's car doors to China, however.
- "It would have potentially catastrophic impacts on our automotive industry, have ripple effects on our entire defense industrial base, and make every American less secure," said Avery Ash, CEO of SAFE, a nonpartisan lobby group pushing policies that advance U.S. national and economic security.
- U.S. Sen. Bernie Moreno (R-Ohio), a former car dealer, put it more bluntly, per Reuters: "As long as I have air in my body, there will not be Chinese vehicles sold in the United States of America — period."
Yes, but: Despite resistance, most industry experts agree it's only a matter of time before Chinese cars arrive.
- At CES in early January, an official with China's Geely Group, owner of Volvo and Polestar, told Autoline Network: "The big question for us is when and where will we go to the USA. I think we'll have an announcement on that in the next 24 to 36 months."
How that might play out
Washington could draw from history in developing a strategy for China's entry, according to one longtime China auto expert.
- "To access the market, Chinese automakers will need to build in America, (with) terms taken directly from China's own playbook" in the 1990s when global automakers entered China, Michael Dunne, CEO of Dunne Insights, tells Axios.
Zoom in: In the '90s, Beijing allowed foreign automakers to enter its market if they formed a joint venture with a Chinese partner and gave them at least 51% control.
- The U.S. could now do the same as a condition for Chinese companies entering the U.S., Dunne says.
- They'd be required to build U.S. supply chains and meet specific tech transfer milestones over time, he adds.
"They'd take that deal in a heartbeat," Dunne says, "because they're desperate for (U.S.) market access."
- Chinese carmakers are struggling at home because of overcapacity and a three-year price war. Exports have been keeping them alive, he says.
- "They look at the U.S. as oxygen," Dunne says. "That's our leverage in the U.S. You need oxygen? If you come here, it's going to be very expensive."
"The TikTok problem"
There's still "the TikTok problem," as AlixPartners automotive consultant Dan Hearsch called it, referring to national security concerns over Chinese ownership of the popular social media platform.
Between the lines: What happens to data collected by Chinese cars on American roads?
- The Biden administration effectively banned Chinese cars from the U.S. by prohibiting key Chinese software and hardware in connected vehicles, beginning with the 2027 model year.
- Trump hasn't lifted those restrictions.
"Until some pretty fundamental things can be solved there, I think that's what will keep Chinese cars from being made and sold here," Hearsch told Axios.
The intrigue: TikTok, however, could also wind up being a template for how to manage those concerns, Dunne said.
- The U.S. struck a deal that would force ByteDance to sell the app's U.S. operations to an American owner and wall off U.S. user data on domestic servers. The U.S., meanwhile, will monitor TikTok's software and algorithms to prevent foreign access or influence.
- The U.S. might try to fashion something similar with Chinese cars, Dunne says.
The bottom line: The U.S. may not be able to keep Chinese cars out forever, but it can decide the price of entry.
