Editor’s note: An earlier version of this story mischaracterized the ideology of the bipartisan Coalition for a Prosperous America.
President Donald Trump, true to his "America First" promise in the 2016 campaign, has confronted China over its trade practices, treatment of intellectual property and alleged currency manipulation. His tenure has been marked by a two-year trade war with escalating tit-for-tat tariffs, followed by a compromise with Beijing — and a resumption of tensions over matters political and pandemic.
As this year's election season ramps up, the stakes are high for an auto industry in turmoil as it faces the COVID-19 pandemic and ensuing recession while also untangling a new North America trade arrangement.
While China remains a potentially attractive place to sell vehicles or source parts, companies must make major investments knowing that Washington or Beijing may quickly ruin their plans.
"As companies try to figure out their global supply chains, especially in the COVID-19 era, there is a lot of uncertainty about what the tariff system is going to look like — not only under the Trump administration, but also if there is a change in administration," said Charles Moore, a managing director for consulting firm Alvarez & Marsal's North American restructuring division. "It just really challenges suppliers and OEMs to be making longer-term decisions with so much in flux."
The first phase of a U.S.-China trade agreement inked in mid-January, intended to roll back some tariffs and boost Chinese purchases of U.S. products, briefly stabilized the relationship, trade policy experts say. But extra purchases have fallen short, and Trump blames China for the coronavirus pandemic. And last week, tensions heightened as Washington ordered the closure of China's consulate in Houston, alleging economic espionage after people were filmed burning papers at night. China, calling the order an "unjustified act," retaliated by ordering the closure of the U.S. consulate in Chengdu.