As Trump and Xi meet, Chinese automakers could be a Pandora's box for U.S. auto industry

DETROIT — As President Donald Trump meets with Chinese President Xi Jinping this week, U.S. politicians as well as the global automotive industry are warning that allowing Chinese automakers to enter the market could be a Pandora's box.

Trump earlier this month said he might be "OK" letting Chinese automakers into the U.S. if they produced vehicles domestically, leading a consortium of auto trade groups representing every major facet of the American auto industry to urge him to rethink that position.

It was an uncharacteristically unified message from automakers operating in the U.S., franchised dealers and suppliers. More than two dozen Democratic lawmakers followed that push with their own letter, urging Trump to keep in place U.S. restrictions against Chinese automakers.

"It's not at this point a partisan issue," Sen. Elissa Slotkin, D-Mich., told reporters Wednesday. "It's about whether we want to make cars in America and whether we want a manufacturing base that can pivot when we need it. If we want that, we shouldn't let them in our country."

Trump is scheduled to host Xi and a delegation from China on Thursday and Friday that reportedly could include Wang Chuanfu, founder of BYD, China's largest automaker, and Robin Zeng, founder of CATL, the world's top battery maker for electric vehicles.

Michael Dunne, an expert on China's automotive industry and a former General Motors executive, said even the potential that those two executives could attend underscores the importance of Xi's trip for the U.S. auto industry.

GM CEO Mary Barra is also expected to be among the attendees at Trump's state dinner for Xi, Reuters reported Wednesday, along with several other U.S. executives, including Tesla CEO Elon Musk.

As for America's other largest automakers, Ford Motor declined to disclose whether CEO Jim Farley will be attending after the Department of Transportation criticized the company for its Chinese ties, including a licensing deal with CATL. Reuters reported Chrysler parent Stellantis said CEO Antonio Filosa is out of the country and not planning to attend.

Industry insiders and onlookers have expressed concerns similar to those raised by automakers and lawmakers as bipartisan bills to ban Chinese automakers from the U.S. move through Congress.

The pressure campaign comes as China-made vehicles have been rapidly expanding outside of their domestic market, especially to Europe and Central and South America. There's fear among global automakers that Chinese rivals, like BYD and Geely, which are heavily subsidized by their governments, could flood global markets, undercutting domestic production and vehicle prices.

Dunne said he doesn't believe those concerns are overblown. He said Chinese automakers would "quickly overwhelm America's auto industry, just as it is now ravaging Europe."

Global market share for Chinese brands jumped nearly 70% from 2020 to 2025, according to market research and consulting firm GlobalData. The automakers' market share in the European Union was virtually nothing in 2020 but hit 12% in August, according to Germany-based Dataforce.

"China's scores of automakers are currently engaged in a fight-to-the-death price war at home," Dunne wrote in a post Monday. "There's red ink everywhere. Access to the U.S., by far the most lucrative car market in the world, is like a giant tank of life-saving oxygen."

For much of this century, China was one of the largest and fastest-growing markets in the world. Non-China automakers flocked to the historically enclosed country with hopes of massive sales and profits.

But after years of success for automakers such as GM, the Chinese automotive sector has rapidly changed from an insular industry to the biggest exporter of vehicles globally.

China's growth has been fueled by government funding for companies as well as a culture of innovation and speed the country has instilled in its workers, experts said. The decision to ramp up exports has come on the heels of a slowing Chinese market and plant underutilization.

Christian Meunier, Nissan Motor chairman of the Americas, described competing against Chinese automakers as a "hell of a challenge" in countries outside of the U.S.

"They have decent product but it's all dumping," he told CNBC during a recent interview. "We know we're not competing with [automakers], we're competing against the governments. … They're attacking very aggressively."

Meunier said the Japanese automaker has been trying to battle the Chinese as best as it can through growing scale globally to lower costs and become more efficient.

"We need to get ready for the day when they come to the U.S. because it will happen one day. Hopefully not tomorrow, but it will happen one day," he said.

Dunne said China's ambitions and ways of doing business are vastly different than the U.S.' allies, which makes it different from allowing imports from Japan, South Korea and other countries.

"As Xi Jinping has alluded to many times, the goal for China is to 'make other countries more dependent on China and China less dependent on other countries.' That's not a friendly posture," Dunne said.

— CNBC's Justin Papp contributed to this report.