DETROIT (WWJ) -- As President Donald Trump prepares to head to Beijing later this week, his words to the Detroit Economic Club January 13th keep ringing in the ears of those connected to the U.S. auto industry.
“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.”
While the President is unlikely to lower large tariffs on vehicles that are made in China. His comments in Detroit can be seen in the context of other efforts to get Japanese, Korean and European carmakers to expand their U.S. automaking operations.
But, there are those that see China as something very different.
“I think many of his advisors have told him that is not a good idea,” said Alliance for American Manufacturing President Scott Paul.
And, the bottom line, says Paul, is that China remains an adversary, not an ally.
“I hope that he understands that Chinese investment is categorically different than investment from Mexico, Canada, Europe, Japan, Korea. Other countries that we would consider trade partners and allies.”
While a Chinese owned auto plant would create jobs in the nearby community. Paul says it would likely cost more jobs elsewhere in the long run. Even Chinese vehicles that are made in America, would be based on research and development heavily subsidized by the Chinese government.
“The Chinese have an economic playbook, when it comes to their product,” says U.S. Senator Elissa Slotkin. “They usually steal intellectual property on something they like.”
Slotkin appearing before the Detroit Economic Club to outline the bill she co sponsored with Republican Bernie Moreno, to keep out vehicles from countries like China that are considered hostile to the U.S.
Chinese carmakers have a lot of excess capacity, with more growth anticipated. They are selling cars in most other countries and have been seeing a lot of growth worldwide.
“I think the example of Europe is a perfect example of what I’m concerned to not see here in the United States,” says Slotkin. “The Europeans allowed Chinese vehicles to be sold there starting in 2021, and they have just gobbled up market share.”
But it’s about more than sales. Chinese vehicles have multiple cameras and sensors and are highly connected. That would allow them to collect a lot of data. That’s why Slotkin’s bill wouldn’t even allow those vehicles to come into the U.S.
Chinese vehicles purchased in Mexico have already been driven into Texas and other southwest states. They will soon be on sale in Canada, just across the Detroit river.
“I’m not going to allow them to cross the Ambassador Bridge, and just start collecting on Selfridge Air Force Base or on some of our big electricity transmission sites, just because the Canadians have decided, out of spite, to allow the Chinese vehicles in.”
Canada has recently allowed the import of fifty thousand Canadian vehicles. They are likely to go on sale late this year or early next year. We’re starting to see the groundwork for those sales.
In the last few weeks we’ve seen some tangible results come out here in Canada,” says Automotive News Toronto Bureau Chief David Kennedy. “We’ve seen some vehicles. There’s some publicly facing hiring going on.”
Nearly two million vehicles were sold in Canada last year. In that context, fifty thousand is a relatively small number. But, it’s a large foot in the door.
“The expectation among the Chinese automakers is that Canada will be open in the future,” says Kennedy. “This is the first step toward getting there.”
Kennedy says BYD, Geely and Chery are the Chinese car makers showing the most interest in Canada. They are already doing some hiring, and appear to be laying the groundwork for a traditional dealer network.
Canadian auto workers and union leaders are very concerned about the costs to jobs. But, Kennedy says with the rising cost of vehicles, there are a lot of people who would be interested in the lower prices that would come with Chinese cars and trucks.
“The prospect of a cheap EV, if you can get an electric car in the thirty thousands, people are interested. Dealers are also interested.”
Lower vehicle prices could also be very attractive to American car buyers. But the manufacturing alliance’s Scott Paul says what often appears to be a bargain on the surface isn’t always a good deal in the long term.
“A good friend of mine describes this as ‘vehicular fentanyl.’ There may be a rush, but ultimately it would be lethal.”
