Skip to content

Facing tariff war, Chinese EVs could exploit trade deal gap to dump models in US

Facing tariff war, Chinese EVs could exploit trade deal gap to dump models in US
The threat from China is emerging just as US automakers face slowing EV sales even while investing billions to produce them in a high-priced bet that Americans will embrace battery-powered autos in the coming decades.

Table of Contents

Facing the threat of a tariff war, Chinese electric vehicle manufacturers could exploit a gap in the U.S.-Mexico-Canada trade deal to flood the American market with low-priced EVs. This has raised concerns in the U.S. auto industry, as the influx of Chinese EVs could potentially devastate domestic manufacturing and lead to job losses. The U.S. government has options to address this threat, including imposing tariffs and pressuring Mexico to keep Chinese vehicles out. However, legal challenges from companies that want to import Chinese EVs could complicate these efforts. The threat from Beijing comes at a time when U.S. automakers are already facing slowing EV sales and investing heavily in the production of electric vehicles. The U.S. is also concerned about China's dominance in the manufacture and sale of zero-emissions electric vehicles, as the country accounted for nearly 62% of global battery-powered EV production last year. The U.S. has raised tariffs on Chinese EVs, but Chinese manufacturers could still potentially use Mexico to avoid these tariffs. The U.S. government is considering various options to address this threat, including blocking Chinese EVs on national security grounds. The U.S. also has leverage over Mexico, its top export market, and could use this to prevent Chinese EVs from entering the U.S. market. The U.S.-Mexico-Canada trade agreement comes up for review in 2026, and the U.S. could seek to alter the agreement to ban or limit Chinese EVs from Mexico. The World Trade Organization, which was established to enforce global trade rules, has become largely ineffective, leaving the U.S. in a "might makes right" world.