White House details plan to safeguard US auto sector, avoid second 'China shock'

By David Shepardson and Ben Klayman

WASHINGTON/DETROIT (Reuters) -Top White House economic adviser Lael Brainard laid out on Monday the Biden administration's broad approach to safeguarding the U.S. auto sector from what it considers China's unfair trade actions.

"China is flooding global markets with a wave of auto exports on the back of their own overcapacity. We saw a similar playbook in the China shock of the early 2000s that harmed our manufacturing communities, and this administration is determined we will not see a second China shock," Brainard said to the Detroit Economic Club.

"That means putting safeguards in place now before a flood of unfairly, underpriced autos undercuts the ability of the U.S. auto sector to compete fairly on a global stage," she added at the Detroit event.

Relatively few Chinese-made cars and trucks are imported into the United States.

The U.S. Commerce Department on Monday proposed prohibiting key Chinese software and hardware in connected vehicles on American roads due to national security concerns, a move that would effectively bar nearly all Chinese cars from entering the U.S. market.

"Americans should drive whatever car they choose – whether gas powered, hybrid, or electric," Brainard said. "But, if they choose to drive an EV, we want to make sure it was made in America, and not in China."

Brainard's appearance comes as the fate of the auto industry and pressure from China has become a major theme in the 2024 presidential election with the Republican nominee Donald Trump suggesting China could dominate future auto production.

Earlier this month, the Biden administration locked in steep tariff hikes on Chinese imports, including a 100% duty on electric vehicles, to boost protections for strategic industries from China's state-driven industrial practices.

The White House aims to ensure that Chinese automakers cannot set up factories in Mexico to get around high tariffs.

"We're going to need to work our partners Canada and Mexico, to address China's overcapacity in the EVs as we look to the mid-term review of the USMCA in 2026," Brainard said of the U.S.-Mexico-Canada trade agreement.

She said U.S. officials are already in talks with Mexico officials and they share U.S. concerns about China using Mexico as a platform to ship into the U.S. at artificially low prices, she said.



Asked about the possibility of a Chinese automaker building plants in the U.S., Brainard said it would happen "with a set of safeguards that we are putting in place now before we confront these problems."

In response to a question referring to comments about Trump saying he was against the administration's "EV mandate," Brainard called that idea "complete nonsense." She said the U.S. needs to invest in EVs or Americans will have less choice.

Source: Investing.com