Five US automotive trade groups—including the Alliance for Automotive Innovation, whose members include General Motors, Ford, Toyota, and Volkswagen—have penned a letter to Trump administration trade officials urging that existing restrictions on Chinese vehicles be maintained. In an apparent response to recent comments by President Donald Trump, the letter also warns against allowing Chinese automakers to establish local production in the US.
The letter warns that China’s efforts to access the US market “pose a direct threat to America’s global competitiveness, national security, and automotive industrial base”. With global sales either plateauing or in decline for many of the OEMs represented in the letter, the warning is timely. The US represents the sole global market that Chinese automakers remain effectively locked out of, and keeping it this way is a clear priority.
President Trump was the one who instigated the ‘trade war’ with China during his first term in office, and this policy was maintained by his successor Joe Biden. Now, he is showing signs of softening his approach. At a January 2026 event in Detroit, he indicated their presence in the US is conditional on their willingness to produce vehicles locally. “If they want to come in and build a plant and hire you and hire your friends and your neighbors, that’s great, I love that.”
He has also alluded to the fact Chinese automakers are already establishing manufacturing presences in Mexico and elsewhere in Latin America. From this perspective, he argues, the US is effectively ceding ground to its neighbours. Global automakers are less convinced, emphasising that Chinese state subsidisation of the automotive sector makes fair competition impossible. The letter warns: ‘The auto industry favors global trade and competition, but that trade and competition must be fair. Unfortunately, China’s auto industry operates under a system that undermines those principles.”
Ford Chief Executive Jim Farley, arguably the CEO most fixated on China amongst the major global players, has repeatedly framed the threat from Chinese automakers in existential terms. On separate occasions he has stated that Chinese automakers have enough capacity to “put us all out of business”, and his descriptions of recent trips to China tend to be filled with descriptors like “humbling” and “an epiphany”.
Ford has, on two separate occasions since February 2026, been reported to be in talks with Chinese automakers—Xiaomi and Geely, respectively—on separate partnership projects. The former has been denied emphatically, the latter appears an open question. In February, Bloomberg reported that the automaker had proposed a joint venture model for Chinese automakers to enter the US market, largely similar in structure to the model used by global players to access China.
The letter goes beyond warnings and makes specific prescriptions for future policy. It calls for the preservation of the Biden-era Commerce Department cybersecurity regulations that took full effect in March 2026. These prohibit the use of connected vehicle software from China and Russia in passenger vehicles sold in the US. The rules were designed to block the data-collection capabilities allegedly buried in Chinese connected vehicle systems, and their preservation is the industry’s most immediate priority given that hardware-level tariff barriers remain in place separately.
A planned summit with Chinese President Xi Jinping, which might have clarified the administration’s position, has been delayed by the Iran conflict. It remains to be seen whether the war will have a meaningful impact on negotiations. China has historically played a neutral role when geopolitical events rear their head; it does not conduct foreign interventions and focuses on trade. At the same time, it has declined to explicitly clarify whether it is supplying weapons to Iran since the conflict began, and is one of the few countries—alongside India and Pakistan—still granted passage via the Strait of Hormuz.
The current tariff architecture—100% duties on Chinese-made electric vehicles (EVs) under Section 301, makes US market entry effectively a non-option for the country’s automakers. The Chinese embassy in Washington rejected the framing of US lobbyists, stating that Chinese vehicles are competitive globally “not by using so-called unfair practices but by emerging from fierce market competition through technological innovation and superb quality”.
Over time, Western efforts at protectionism have been chipped away. Prime Minister Mark Carney’s January 2026 decision to allow up to 49,000 Chinese EVs annually into Canada at a reduced 6.1% tariff has, for example, prompted fears of indirect US market access. In the EU, price minimum agreements have been established as an alternative to the per-automaker duties currently in place. If the US softens its position, then global incumbents will not be insulated from their Chinese counterparts in any major global market.
The Alliance for Automotive Innovation has separately opposed a Washington state law passed this month that allows EV makers to sell directly to consumers without dealerships, arguing that it ostensibly creates a legal pathway for Chinese players to enter the US market by bypassing the franchise dealer network they currently lack.
The parallels to earlier periods of trade anxiety are not lost on the industry’s critics. US automakers raised similar objections to Japanese competition in the 1970s, a period that ultimately reshaped the domestic market in ways Detroit did not anticipate and could not reverse in the aftermath. Foreign market share in China itself—once the growth engine for GM and Volkswagen—has collapsed from 64% in 2020 to roughly 31% in 2025 as local brands have outpaced foreign incumbents on software, price, and electrified options.
