Trump Says Chinese Automakers Can Build in US Despite 100% Tariffs

Donald Trump has stated that his administration would not block Chinese automakers from building electric vehicles in the United States, even as imports face 100 per cent tariffs.

Speaking in September 2026, Trump indicated that Chinese manufacturers could establish assembly plants in states such as Tennessee or Alabama, despite warnings from the domestic automotive sector that local Chinese production could threaten traditional US carmakers.

While fully built electric cars from China remain virtually barred under the existing 100 per cent tariff wall, industry analysts note that manufacturers cannot easily replicate China’s integrated parts ecosystem and low-cost supply chain in the American South.

Supply Chain Realities in the US Market

RetailNews Asia notes that Chinese electric vehicle brands are directing capital toward markets with clearer regulatory frameworks. Automakers such as BYD and XPENG are opening assembly hubs and distribution networks across Southeast Asia, Europe, Australia, Latin America and Africa. Those regions offer established trade corridors, predictable import policies and faster adoption rates than the North American retail market.

For Asian parts suppliers and battery vendors, building factories in North America brings heightened political exposure. Shifts in US federal policy make long-term factory payback calculations unreliable. Expanding in ASEAN, South America and Central Europe allows Chinese automotive groups to utilize their domestic supply networks while building local retail presence near high-demand consumer clusters.

Regional Diversification Beyond North America

American automotive retail conditions remain difficult for foreign pure-play electric vehicle brands. Charging network rollouts in the US lag behind China and Western Europe, while consumer demand for battery-electric passenger cars has softened relative to hybrid options. Chinese original equipment manufacturers achieve better factory utilization rates by serving emerging markets across Asia and South America, where entry-level city cars face minimal competition from legacy American brands.

Legacy US car companies have used the 100 per cent import tariff to protect sales of high-margin petrol sport utility vehicles and pickup trucks. If Chinese manufacturers establish US assembly operations, domestic producers will face direct price pressure on their home turf. That outcome would force domestic brands to accelerate their own electric platform cost reductions or surrender market share in entry-level passenger car segments.

Tariff Walls and Industrial Strategy

Washington escalated tariffs on Chinese electric cars to 100 per cent to shelter domestic producers from lower-cost imports. That defensive trade posture accelerated the construction of Chinese automotive plants in Thailand, Brazil and Hungary rather than drawing assembly capital into North America.

Chinese automotive executives are tracking whether the US federal government establishes formal foreign investment security rules for automotive production sites before submitting any state-level factory applications.