Daniel Howes: How GOP reverse in auto policy speeds rise of empowered China
Rarely has Ronald Reagan's tongue-in-cheek aphorism "I'm from the government and I'm here to help" proven more apt than in today's auto industry, whipsawed between the opposing worldviews of two presidential administrations, their we-know-best policies and reality.
President Donald Trump is now calling the automotive policy shots, and they look nothing like the climate-focused flood of federal programs fielded by the Biden administration to electrify the auto industry over the past four years. Instead, new Trump policy advanced in the House budget bill this week threatens to throw pretty much all of it in reverse, whatever the costly implications.
That's the point, of course: Joe Biden's bid to leverage post-COVID government spending to build a battery industry, to bolster green manufacturing, to create thousands of jobs, to nurture a nascent auto tech sector, to counter Chinese ascendancy in EV spaces all combined to reshape the arc of capital investment in the United States by Detroit's automakers and their foreign rivals.
Until they don't. Now, much of it is in question, along with the multi-billion-dollar product bets made by industry players here and abroad. They expected larger numbers of Americans and Europeans to embrace electrified rides more readily, despite range fears, insufficient charging stations, long charging cycles and anti-EV haranguing in the United States aimed at half the country.
Much of the industry got it wrong. Too many pesky consumers making up their own minds didn't cooperate, even as companies like Ford Motor Co. and General Motors Co. invested billions in EV and battery plants armed with the assurance of federal support - until Biden left the race, Kamala Harris lost and Trump's GOP Congress moved to change course.
So here we are, on the precipice of the most abrupt federal automotive policy changes since the Oil Shocks of the 1970s and '80s shook Detroit to its core and created opportunity for foreign competition, then chiefly from Japan. That didn't end well, as this town knows better than most, and new federal policy effectively aims to cede competitive ground to Chinese rivals whose culture measures "long-term" in millennia.
The House Republican draft budget plan would dump federal tailpipe emissions standards, cut $7,500 tax credits for EVs, claw back uncommitted tax dollars earmarked for clean vehicle manufacturing, and more. It would repeal Production Tax Credits come 2031, a necessary tool for companies like Ford to make new U.S. investments. And when combined with Trump's auto tariffs, it's enough to redirect the trajectory of an industry not long ago rushing to realize a fully electrified future.
"Walking away from that? Taking the policy away that incentivizes that?" says Glenn Stevens, executive director of MichAuto, the Detroit Regional Chamber's auto unit. "That is backward thinking. Otherwise, the hometown teams get more niche-oriented. And we don't want that."
But that might be what the country gets from the auto policy whipsaw: a one-way ticket to second class in the next automotive century. China is methodically building a vertical electric-vehicle ecosystem that it controls - batteries, minerals, battery packs, software, electric motors that can be assembled into affordable packages already claiming EV share in markets outside the United States and Canada.
Here at home? In an industry rife worldwide with government involvement, the automakers' alleged friends in Washington keep changing the rules. They dangle incentives to influence investment decisions before they or their successors withdraw them. They use federal tax laws to encourage the purchase and use of vehicles with "alternative" powertrains before moving to gut such policies. They encourage Detroit to play the EV game and offer tools to help, only to cede (as Trump did on the campaign trail in Flint) the space to China.
"Why are we making a product that they dominate?" Trump said at the time. China is "going to dominate. You will not have a car industry left, not even a little bit of a car industry."
Yes, the government is here to "help" the industry. Fat chance, given the sharply opposing world views that motivate and inform auto policy-making in today's Republican and Democratic parties. Consensus? There is little of it around the government's role in today's auto industry, which is ironic considering the industry is arguably the most regulated in the country.
Meantime, leading voices in the industry are choosing to lay low as the proposed GOP budget makes its way through Congress and automakers await more clarity on the tariff regime that eats daily at their top and bottom lines. Even worse, the only trade deal offering an early peek into auto industry issues - Trump's agreement with the United Kingdom - treats British vehicles coming into the United States more favorably than Detroit-built vehicles coming from Canada under the United States-Mexico-Canada Agreement.
If that sounds fishy, that's because it is. But it's not new.
Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
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