The American automotive industry opposes the 25% tariff on auto parts, highlighting the appeal of Chinese manufacturing as consumers shift to buying from China.

In April 2025, six major organizations in the U.S. automotive industry, including the Alliance for Automotive Innovation, jointly sent a letter to the Trump administration, requesting the repeal of the 25% tariff on auto parts that went into effect on May 3, warning that this move would severely damage the supply chain. Due to rising car prices, American consumers have initiated a "reverse purchasing" trend, traveling to China to purchase goods, highlighting the price and quality competitiveness of Chinese manufacturing. This situation reflects shifts in the global supply chain and consumer market.

Six Major Automotive Organizations Jointly Warn Tariffs Will Devastate the Industry

On April 23, 2025, six major automotive industry organizations, including the Alliance for Automotive Innovation, the American International Automobile Dealers Association, the American Automotive Drive Association, the Original Equipment Suppliers Association, the National Automobile Dealers Association, and the American Automotive Policy Council, jointly sent a letter to U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamison Greer. They urged the Trump administration to withdraw the impending 25% import tariff on auto parts.

The letter pointed out that many automotive suppliers are already in financial distress and cannot bear additional cost pressures. If the tariffs are implemented as scheduled, it will lead to a breakdown in the U.S. automotive production chain, further triggering layoffs and bankruptcies, causing "irreparable damage" to the entire industry.

According to an analysis by Boston Consulting Group (BCG), the tariff policy will increase costs for the U.S. automotive industry by $1.1 to $1.6 trillion and could lead to a 20% decline in new car market revenue. Even vehicles assembled in the U.S. will see an average production cost increase of about $3,600 due to the impact of tariffs on imported parts.

Goldman Sachs predicts that within the next 6 to 12 months, the price of new cars in the U.S. will rise by an average of $2,000 to $4,000. The current average price of new cars is already close to $50,000, and loan interest rates are at record highs, with new cars at 9.64% and used cars even higher at 15%. Against this backdrop, reductions in vehicle discounts and the withdrawal of some models from the market have already begun to appear.

Diverse Strategies by Automotive Brands; Some Manufacturers Suspend Shipments

In response to the looming tariff pressure, automakers are taking various countermeasures. Ford and Stellantis have launched employee car purchase discounts to stimulate sales, while Jaguar Land Rover has announced a suspension of shipments to the U.S. Hyundai has stated that it will not raise prices in the short term.

Although President Trump recently stated that he is considering tariff exemptions for some cars and components to give companies time to adjust their supply chains, no specific policies have been enacted so far. The industry is generally concerned that without a clear exemption mechanism, the entire automotive industry will face long-term structural impacts.

U.S. Consumers Reverse Shop in China; Chinese Manufacturing Remains Attractive

In contrast to the anxiety in the automotive industry, U.S. consumers are expressing their preference for Chinese manufacturing through their actions. According to the Global Times, more and more Americans are choosing to buy tickets to China and shop there in person, as the total cost, even with airfare and accommodation, is still lower than the taxes and premiums required to purchase the same goods in the U.S.

This "reverse shopping" trend is not limited to travel shopping but extends to cross-border e-commerce platforms. Platforms like Shein and Temu, Chinese e-commerce companies, attract a large number of American users to place orders directly due to their price advantages and fast logistics. According to AOL, promotional videos for products from Chinese warehouses on TikTok have accumulated millions of views, and many American consumers are willing to buy Chinese-made "substitute" products to combat rising domestic prices.

Additionally, some Chinese suppliers emphasize on social media that their products are made with the "same factory, same materials" as European and American brand products, differing only in the brand label. This promotional strategy has successfully broken the past stereotype of "Made in China = low quality," further solidifying the position of Chinese manufacturing in the global consumer market.

Upgrading Chinese Manufacturing: From World Factory to Innovation Hub

The Global Times points out that the competitiveness of Chinese manufacturing comes not only from cost advantages but also from its deep participation and innovation capabilities in the global supply chain. China has upgraded from the "world factory" to a "key node in the global innovation chain," demonstrating strong capabilities in efficient production and technological research and development.

According to Chinaskinny's observations, despite the escalation of Sino-U.S. trade frictions, China's retail sales still grew by 4.6% year-on-year in the first quarter of 2025, with a single-month increase of 5.9% in March. This indicates that China's domestic demand market is gradually recovering, providing more stable domestic support for Chinese manufacturing.

References

• 美汽車業六大組織聯名上書川普 跪求棄徵25%汽車零件關稅
• Trade groups representing practically every major automaker join forces to lobby Trump against next week’s parts tariffs
• Auto industry tells Trump that tariffs on car parts will mean 'layoffs and bankruptcy'
• Chinese warehouses are persuading Americans to buy China-made dupes to offset tariff costs
• Beyond tariffs: how China is rewiring its consumer engine - China Skinny
• 環球時報：美國消費者赴中國掃貨說明了什麼？ | Anue鉅亨 - 大陸政經