A Xi-Trump summit deal can throw US carmakers under the China bus

Top American automakers, suppliers and dealers have launched a coordinated lobbying blitz ahead of the high-stakes Washington summit between President Donald Trump and Chinese President Xi Jinping.

Industry executives are scrambling to neutralise potential trade deals that could open domestic auto manufacturing lines to state-backed Chinese competitors. "We urge your administration to maintain policies that keep the door firmly shut to Chinese automakers seeking to sell, import or manufacture vehicles inside the U.S.," ⁠said a letter to Trump by six groups representing General Motors, Toyota, Volkswagen, Ford, Hyundai, Stellantis, Tesla and others, as per Reuters. CNBC reviewed the letter, which revealed deep-seated anxieties across corporate boardrooms regarding the future of domestic vehicle manufacturing.

Trump comment scared carmakers


The catalyst for this sudden panic stems from remarks Trump made during a recent television appearance on Fox News. Trump told the network he would accept Chinese car companies building vehicles inside the US if they employed local workers. "If China wanted to come in and open a plant to build their cars here, I'd be okay with that," Trump said.

He explicitly compared the prospective arrangement to Japanese automakers who operate assembly lines on American soil, noting that the primary benefit lies in hiring local labor. Yet he simultaneously drew a hard line against importing finished Chinese vehicles or allowing production to surge out of neighboring Mexico.

The sudden shift in tone caught Washington lawmakers and industry associations completely off guard. Michigan Democratic Senator Elissa Slotkin warned reporters about unconfirmed reports indicating that Xi might bring executives from Chinese electric vehicle titan BYD to Washington.

Slotkin stated that such a move would signal backdoor agreements allowing Chinese cars into the domestic market or inviting foreign entities to set up domestic assembly lines.

Republican Representative John Moolenaar echoed those concerns, telling Reuters that Beijing leverages industrial policies through firms like BYD to systematically ruin Western manufacturing bases. Lawmakers from both sides of the aisle are now demanding that the executive branch issue explicit, unconditional denials regarding any potential concessions to foreign auto giants.

Also Read | What will Trump and Xi discuss in Washington next week?

The unified industry front

Industry groups quickly came together to challenge any transactional concessions that could threaten long-term stability. As reported by Reuters, the joint letter signed by organizations including the Alliance for Automotive Innovation and the American Automotive Policy Council argued that Chinese firms currently hold zero market share in the US, and the coalition warned that granting foreign entities a domestic manufacturing foothold would directly harm established brands.

"We urge your administration to maintain policies that keep the door firmly shut to Chinese automakers seeking to sell, import or manufacture vehicles inside the U.S.," the letter stated. The associations emphasized that allowing state-backed operations would merely shift jobs away from companies that made generational investments in America.

Also Read |Trump may hold off on new capacity tariffs as Xi meeting draws closer: Report

National security and regulatory walls

The White House responded to the industry pushback by noting it continues to work alongside domestic manufacturers to safeguard national and economic security. Nevertheless, structural protections remain fragile despite existing regulatory walls. CNBC highlighted that the automotive sector views itself as a foundational pillar of the national defense base, warning that once hollowed out, the manufacturing ecosystem cannot be rebuilt overnight.

Strict federal rules introduced in early 2025 effectively banned Chinese passenger vehicles due to severe national security fears. Those regulations target connected vehicle technologies like Bluetooth, Wi-Fi, and cellular data systems capable of transmitting sensitive location and driver information back to China.

The US maintains tariff barriers exceeding one hundred percent on imports of Chinese electric vehicles to prevent market distortion.

The European precedent

Global market realities underline why American executives are reacting with such fierce urgency. Across Europe, traditional carmakers recently endured severe disruptions as heavily subsidized Chinese battery-electric vehicles flooded local markets.

European policymakers discovered that aggressive overcapacity and state-backed financing allowed foreign entrants to capture significant market share before local producers could adapt.

Even after Brussels implemented steep anti-subsidy tariffs, Chinese companies rapidly pivoted by negotiating direct joint ventures or shifting toward plug-in hybrid models. European legacy brands that initially welcomed foreign manufacturing capital to solve operational bottlenecks soon realized they had invited an existential threat onto their home turf.

Industry analysts note that European auto plants are now operating under severe strain while trying to compete against a relentless wave of low-cost imports.

Domestic realities and future stakes

American manufacturers are currently navigating their own severe domestic pressures that amplify these fears. High vehicle sticker prices, sluggish consumer adoption rates for electric models, and soaring legacy expenses have squeezed profit margins across the board.

Because Trump approaches international trade through a transactional lens, industry leaders fear he might trade access to the lucrative domestic auto market in exchange for some unrelated geopolitical concessions.

Interestingly, the US Congress is already trying to codify restrictions. The bipartisan Connected Vehicle Security Act of 2026 was officially introduced in the US Senate in April by Senator Bernie Moreno (R-OH) and Senator Elissa Slotkin (D-MI), with companion legislation introduced in the House by Representative John Moolenaar (R-MI) and Representative Debbie Dingell (D-MI).

The bill aims to permanently codify and expand executive restrictions by banning the import, manufacture, sale, or operation of connected vehicles, software, and hardware tied to foreign adversaries like China, Russia, Iran, and North Korea. The legislation gained heavy backing from major automakers and labor unions alike, and was unanimously approved and advanced by the Senate Committee on Commerce, Science, and Transportation in July, moving it closer to a full floor vote in Congress.

While Congress weighs legislation to permanently codify existing bans on Chinese connected vehicles, Trump's upcoming summit with President Xi serves as a critical test. For an American automotive sector already wrestling with immense transition pains, permitting Chinese entry risks replicating the painful industrial displacement already witnessed across Europe.