Trump's auto tariffs will leave China free to rule the streets

The move threatens non-Chinese supply chains for electric vehicles

- David Fickling

If you had a vision of the future where the global car industry wasn't dominated by China, you can kiss those dreams goodbye. That's because US President Donald Trump's promised 25% tariff on auto imports, announced last week, takes an axe to the only bits of the emerging electric vehicle (EV) supply chain that aren't dominated by China.

The biggest losers when this levy takes effect will be Japan and South Korea. They account for a third of the cars imported to the US, and as much as two-thirds of those imported from outside North America. Mexico and Canada will be partially exempt.

They're also crucial to the development of EVs because South Korean and Japanese companies produced more than a quarter of all EV batteries last year, making them the only big challengers to China's market dominance. US and European businesses barely figure, especially since the bankruptcy of Sweden's Northvolt.

If the US wants to bring manufacturing jobs back to heartland America, landing a blow against these two Asian allies is a strange way to go about it. South Korea was the biggest foreign investor in new projects in the US in 2023, signing off on $21.5 billion of greenfield plants. Japan has spent decades assembling the largest portfolio of FDI in the US, with $783 billion of assets, about 15% of the total.