As Donald Trump enters his second term as President of the United States, one of his most defining and controversial moves has been the reintroduction—and escalation—of tariffs. Among his most impactful decisions is a renewed focus on the automotive sector, where he has imposed a 25% tariff on imported vehicles. This aligns closely with his “America First” economic philosophy, which seeks to strengthen domestic manufacturing and reduce reliance on foreign imports.
At the heart of this policy is the perceived erosion of the American automotive industry. If we look at the U.S. car market for 2024, it’s dominated by foreign brands. Toyota, Honda, and Hyundai—all Asian automakers—occupy top spots in sales, with European companies like Volkswagen, Stellantis, and BMW not far behind. These foreign brands have taken significant market share, prompting calls from Trump and his allies to protect the domestic auto sector.
But one notable absence from the U.S. car market is China. This absence is surprising, especially when you consider China’s rapid rise in the global electric vehicle (EV) market. In 2023, Tesla remained the global leader in battery EVs, but trailing closely were Chinese companies like BYD, NIO, and XPeng. Together, these three Chinese brands hold a larger combined market share than Tesla, cementing China’s dominance in the EV space. These companies are no longer just producing for domestic consumption—they are exporting to Europe, Asia, and other regions. Yet, their footprint in the U.S. remains practically nonexistent.
Why Aren’t Chinese EVs in the U.S.?
The reason isn’t consumer demand or technical limitations. It’s politics—and tariffs.
Chinese cars, especially EVs, have been largely blocked from the U.S. market due to a combination of trade barriers that originated during Trump’s first term in 2018. Back then, he imposed a 27.5% tariff on Chinese-made vehicles, a move that the Biden administration chose to uphold and even expand. As of 2024, the U.S. government raised the tariff on Chinese EVs to a staggering 102.5%, effectively doubling their price and rendering them uncompetitive in the U.S. market.
To put that into perspective: the average unit value of Chinese EV exports in 2023 was around $23,100. Adding a 102.5% tariff brings the cost to roughly $46,800—similar to the price of a Tesla Model 3 or Ford Mustang Mach-E. This entirely wipes out the pricing advantage that Chinese automakers have relied on.
The Price Advantage—and the Threat It Poses
So why are Chinese cars so cheap?
Three reasons: low labor costs, massive production scale, and heavy state subsidies.
In 2023, China’s average annual wage was about $16,700—substantially lower than the U.S. average of $58,000. At the same time, the Chinese government has invested more than $230 billion into its EV sector since 2009. This kind of state-backed support has enabled Chinese automakers to produce vehicles at unbeatable prices.
This affordability, while great for consumers, is seen by many in Washington and Detroit as an existential threat. If these cheap EVs were allowed to flood the U.S. market, they could undercut American brands, force factory closures, and eliminate thousands of unionized jobs—especially in the politically sensitive Midwest.
As one policy group warned, the arrival of Chinese cars could be “an extinction-level event for the U.S. auto sector.”
Bipartisan Agreement: Trump and Biden Align
Surprisingly, both the Trump and Biden administrations—despite their differences on many issues—have agreed on keeping Chinese cars out. Tariffs on Chinese goods, including vehicles, have bipartisan support in Congress. Many lawmakers view them as necessary to protect American industry and workers.
In 2023, a bipartisan group of lawmakers urged the U.S. Trade Representative to increase tariffs on Chinese cars. Senator Sherrod Brown (D-OH) went even further, calling Chinese EVs an “existential threat” and demanding an immediate import ban. Brown accused China of “illegal subsidies” and “government-backed cheating,” warning that these practices could devastate Ohio’s auto industry.
Interestingly, even environmental groups—normally strong supporters of EVs—backed tariffs. Their rationale? To give U.S. automakers time to catch up in the EV race without being wiped out by China’s pricing advantage.
The Mechanics of Keeping Chinese Cars Out
So how exactly is the U.S. government keeping Chinese EVs out?
It starts with tariffs—massive ones. As mentioned, Chinese-made EVs now face a total duty of 102.5% when entering the U.S. This includes:
- The standard 2.5% import duty on all cars
- The original 25% tariff initiated by Trump
- And an additional 75% tariff hike added in 2024 under Biden’s updated Section 301 trade measures
For gasoline-powered vehicles, the rate remains at 27.5%, but it’s the EV sector that’s been specifically targeted.
Even vehicles that are assembled in China by non-Chinese brands, or Chinese companies with ties to Western firms (like Polestar, which has links to Volvo), are subject to these tariffs. So, it’s not just about blocking Chinese brands—it’s about stopping any car that’s manufactured in China from entering the U.S. at a competitive price.
Trump had even floated the idea of imposing 100% tariffs on all Chinese cars during his first term—a threat that has now effectively materialized under Biden’s updated policy.
What’s Next?
With these high tariffs in place, it’s unlikely that Chinese EVs will enter the U.S. market anytime soon. And that’s precisely the point. The U.S. government has made a calculated decision: to protect its auto industry and workforce, even at the cost of affordable EVs for consumers.
Whether this strategy works in the long run remains to be seen. American automakers still face pressure to lower costs, scale up EV production, and remain competitive on the global stage. But for now, Washington has drawn a red line—Chinese cars are not welcome.
And it’s one of the few issues that Trump and Biden seem to agree on.