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Alliance for American Manufacturing Urges US Government to Protect Auto Sector from Cheap Chinese EVs Coming from Mexico

As concerns continue to mount within the US auto industry regarding the potential ramifications of an influx of subsidized, low-cost Chinese electric vehicles (EVs) entering the market via Mexico, the Alliance for American Manufacturing has issued a stark warning.

Report Highlights Need for Trade Measures

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In a report titled “China’s Existential Threat to America’s Auto Industry and its Route Through Mexico,” released on Feb. 20, the Alliance underscored the urgent need for robust trade measures to avert what it sees as a looming crisis.

Potential Threat to Auto Industry

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The Alliance expressed grave apprehension that the dominance of Chinese EVs could pose a serious threat to the longstanding US auto industry.

Cheap Chinese automobiles, heavily subsidized by the Chinese government, could precipitate an “extinction-level event” for the US auto sector.

Chinese EV Investments in Mexico

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Reports have surfaced indicating significant investments by Chinese EV firms in Mexico, leveraging favorable tariffs facilitated by trade agreements between the US and its southern neighbor.

Big Auto Player Plans

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Big players like BYD, Cherry, and SAIC Motors are either considering or have already announced plans to establish manufacturing plants in Mexico to tap into the North American market.

Concerning Trends Addressed

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The report highlighted a concerning trend: while auto part imports from China to the US declined by 17 percent between 2017 and 2023, imports from Mexico surged by 20 percent during the same period.

This suggests that Chinese-made components are circumventing US tariffs through Mexico.

Comprehensive Measures Needed

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Although the US auto sector has been shielded from direct competition with Chinese-made EVs by a 25 percent tariff imposed during the Trump administration, the Alliance argues that more comprehensive measures are needed to prevent Chinese-owned companies manufacturing in Mexico from exploiting the benefits of North American trade agreements.

China on the Forefront

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The Chinese government’s substantial support for its EV industry, including massive subsidies and preferential policies, has propelled China to the forefront of the global EV market.

Exports Skyrocket

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China’s EV exports have skyrocketed by 851 percent in the past three years, capturing 60 percent of the global EV market share.

Proactivity Urged

Credits: DepositPhotos – BRUSSELS, BELGIUM. 24th March 2022. Joe Biden, President of United States of America, during press conference after NATO extraordinary SUMMIT 2022. — Photo by gints.ivuskans

The Alliance urges the Biden administration to take proactive steps to safeguard the US auto industry, including raising tariffs on Chinese-made vehicles, tightening enforcement of trade agreement rules, and excluding components and vehicles from non-market economies like China from preferential treatment under trade pacts.

Call for Increased Tariffs

Credit: DepositPhotos –FILE–Tesla CEO Elon Musk is pictured during a delivery ceremony at the sales center of Tesla in Jinqiao, Shanghai, China, 23 April 2014.

Tesla CEO Elon Musk has echoed concerns about the potential dominance of Chinese EVs in the absence of trade barriers.

Meanwhile, the House Select Committee on the Chinese Communist Party has called for increased tariffs and stricter rules on country of origin to prevent a flood of Chinese EVs into the US market.

European Commission Initiates Probe

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In Europe, Chinese EVs benefit from lower tariffs and green policies, posing a competitive threat to EU automakers.

The European Commission has initiated an anti-subsidy probe into Chinese EVs, acknowledging the challenges posed by heavily subsidized imports flooding global markets.

Alliance Suggests Addressing Chinese Directly

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Expanding upon the report’s recommendations, the Alliance suggests that the Biden administration should also explore diplomatic avenues to address the issue with the Chinese government directly.

Level the Playing Field

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Engaging in dialogue to negotiate fair trade practices and reciprocal treatment for American goods in Chinese markets could help level the playing field for US manufacturers.

Need for Increased Investment

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Furthermore, the report calls for increased investment in research and development (R&D) within the US auto industry to spur innovation and maintain competitiveness in the global market.

By fostering technological advancements in areas such as electric and autonomous vehicles, American automakers can differentiate themselves and attract consumers seeking cutting-edge products.

Call for Coordinated Approach

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Looking ahead, the Alliance calls for a coordinated and proactive approach from government, industry, and civil society to address the multifaceted challenges facing the US auto sector.

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