President Donald Trump seems to have gone off script on China. In his first term and early in this one, he set himself apart from his predecessors by recasting the U.S.-China trade relationship in much more realistic terms, unafraid to impose tariffs and other measures to recalibrate trade flows and derisk supply chains. For American industrial workers battered by decades of factory closures and trade cheating, this was a welcome change.
But Chinese leader Xi Jinping has played his cards well, applying pressure by restricting access to critical minerals, manipulating the value of the renminbi, erecting barriers of his own and establishing workarounds by routing goods through third countries to blunt the economic impact of the U.S.-imposed tariffs. While the U.S.-China trade deficit has shrunk, China has maintained a massive trade surplus overall—a record $1.2 trillion last year. Now Xi is coming to Washington for a high-stakes summit on September 24.
And while Trump has indelibly altered the bilateral trade dynamic, he risks squandering any leverage he’s created if he ignores China’s three big "C's" that spell trouble for American manufacturing: cars, currency and chips. China’s auto industry is taking over the world. Decades of stacked subsidies—whether for energy, metals, batteries or the autos themselves—as well as technology transfer and supply chains utilizing forced labor have created an export behemoth.
In 2024, we called it an "existential threat" to America’s own auto jobs, and lawmakers and auto CEOs agree. But Trump twice now has indicated he might be OK with Chinese auto factories in America while keeping imports out. The auto sector is the heartbeat of an extensive manufacturing ecosystem in our nation.
Handing over the keys to potential adversary makes no sense at all. Imagine trying to mobilize a foreign-owned industrial sector in a time of national crisis. Trump has made a point of attracting foreign investment into our economy and, in many cases, it has economic benefits for American workers.
But if he allows this he would go down in history as our nation's King Priam, the leader who let the Trojan Horse in. Next, consider China’s currency. Unlike the U.S. dollar, China’s renminbi isn’t freely floating.
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