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.”
I think it’s not so much about going after the China market, but about cheaper approach to going after the worldwide market (except US). Going through US means taking huge hit on import tariffs on material and the pissing contest causes a lot of retaliatory tariffs further making things rough on the way into other countries. Since it keeps on changing, impossible to realistically plan around.
So the US market suffers as jobs exit and prices go up, but the prices were going to go up either way. The world except US is more preserved.
Also, to the extent that they could compete with China, this certainly wouldn’t hurt.