(Saul Loeb/Pool Photo via AP, File)
The Wall Street Journal is reporting that U.S. automakers are seeking a workaround to avoid increased expenses resulting from President Donald Trump’s controversial tariff policy: relocating manufacturing to China.
“Four major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks,” the Journal reports. “Several traditional and electric-vehicle makers—and their suppliers—are considering shifting some auto-parts manufacturing to China to avoid looming factory shutdowns, people familiar with the situation said.”
Trump announced a draconian tariff policy on April 2nd, “Liberation Day.” However, the stated goal of moving overseas manufacturing back to the United States was seemingly scrapped in favor of negotiating better deals. In the two months since it was announced, very few deals have been announced, but numerous pauses on specific tariffs have been announced, leading critics to suggest this trade war wasn’t entirely thought through.
Now, according to a new report, and on the eve of a much-hyped conversation between Trump and Chinese President Xi Jinping this week, there are reliable reports that U.S. automakers in dire need of rare earth materials for the production of electric vehicles are looking to move some manufacturing operations from the United States to China. This would be a political disaster for Trump as well as an economic one for the communities of workers who would ostensibly lose their jobs if such a thing were to occur.
Writing for the Wall Street Journal, Sean McClain and Ryan Felton report:
Four major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks.
Several traditional and electric-vehicle makers—and their suppliers—are considering shifting some auto-parts manufacturing to China to avoid looming factory shutdowns, people familiar with the situation said.
Ideas under review include producing electric motors in Chinese factories or shipping made-in-America motors to China to have magnets installed. Moving production to China as a way to get around the export controls on rare-earth magnets could work because the restrictions only cover magnets, not finished parts, the people said.
If automakers end up shifting some production to China, it would amount to a remarkable outcome from a trade war initiated by President Trump with the intention of bringing manufacturing back to the U.S.
The Wall Street Journal has been a remarkably vocal critic of Trump’s tariff policy, even from its conservative opinion pages, which seem to have soured on what they clearly see as Trump’s heavy-handed and interventionist approach. Judging by market reactions, which have included numerous nosedives in the stock markets and unprecedented volatility, the investment clas sand financial communities are not sold on Trump’s approach either.
In advance of the planned conversation with Xi, Trump took to his Truth Social platform early Wednesday morning, saying he’s “always” liked Xi, but he’s “VERY TOUGH.”
“I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!”
Details of when the call between Trump and Xi is expected to take place have not yet been publicized, but there is massive pressure for Trump to emerge from that phone call with something of a win.