Originally Authored at TheFederalist.com
When President-elect Donald Trump is sworn in as our 47th president of the United States on January 20, 2025, he will inherit an auto industry that has been greatly diminished in recent years. There are many reasons for this decline, including the misguided environmental policies of the Biden administration, Chinese market manipulation and exploitation, and trade deals and regulations that cripple American auto manufacturers.
Just how bad are things? Well, Stellantis (the parent company of Dodge, Chrysler, Jeep, and Ram) reported a 48 percent profit decline in the first half of 2024, followed by a 27 percent drop in the third quarter. Astronomical fuel-efficiency fines from the Environmental Protection Agency (EPA) have forced them to phase out their consumer-favored Hemi V8 engines from all four brands and to spend billions on developing electric vehicles (EVs) in which brand loyalists have no interest. From January to June of 2024, Ford reported that their EV division lost $2.5 billion (about $48,000 per vehicle sold). GM announced that it is working to reduce losses on electric vehicles by $2 billion to $4 billion in 2025 compared to 2024.
Some of the world’s largest automakers may not survive this government-created debacle, but collapse of the industry can still be stopped. Here are some of the steps that President Trump can take in his second term to make the American auto industry great again.
End the Regulatory Stranglehold on Car Companies
The U.S. auto industry employs the best automotive minds in the world but has been crippled by the increasingly regulatory regime in Washington, D.C. Former New York Rep. Lee Zeldin is being tapped to head up the EPA, an agency that could play a pivotal role in saving our automakers.
For decades, California has attempted to regulate fuel economy and emissions, independent from the federal government’s standards. The head of the EPA should establish and Congress should pass legislation prohibiting a state from dictating its own fuel economy standards, since it impacts the sales of vehicles in the rest of the country. California’s current policy is unreasonable, costs our automakers hundreds of millions of dollars, and needs to end.
Next, the EPA should shift its attention to fixing the stifling Corporate Average Fuel Economy (CAFE) standards. Currently, automakers face a no-win choice: Sell vehicles with internal combustion engines based on consumer demand and pay hefty regulatory fines to the federal government, or spend massive amounts of money to meet federal fuel economy standards and have sales fall short.
The CAFE standard in 2015 was set at 35 mpg, which appears to be the sweet spot, as the majority of automakers were able to achieve this and avoid excessive fines. The EPA should return to the 2015 standard and lock it in place with no phased increases. This would provide American automakers with a consistent standard and allow them to continue to find ways to make their products more efficient and clean while being guided by public demand and organic innovation, not by the threat of government regulation or fines.
China is Not a Competitor, They are a Threat
The Chinese are taking steps to become dominant in the auto markets in Asia, Latin America, and parts of Europe at an alarming rate, and they have their eyes on the United States next. After a recent visit to China, the CEO of Ford, Jim Farley, called the rise of Chinese EV makers an “existential threat” to the U.S. auto industry. His European counterparts have echoed similar sentiments.
How did China go from relative obscurity to “existential threat” in such a short period of time? For decades, China has required all non-Chinese companies to submit to a “forced technology transfer” as a condition to sell products on the Chinese market, which has forced automakers to give China access to their R&D for free.
They have also manipulated first-world countries to sign onto “zero emissions” climate policies, such as the Paris Climate Accords, which require wealthier nations to pay $300 billion to poorer nations, including China, to transition to “clean and green” energy. China conveniently happens to control 70 percent of the world’s rare earth mining and nearly 90 percent of the global rare earth processing capacity used to power electric vehicles.
Chinese government then subsidizes the overall cost of their cars so that they can be sold at a much lower price than their competition, effectively putting any competitors out of business. It’s evil and effective at the same time, and America has allowed it to happen.
So, what can be done? For starters, Congress should make it a crime for any U.S. company or individual to share their intellectual property with Chinese-based companies or individuals. Similarly, any foreign entity working with an American company that shares its intellectual property with China should face fines or a ban from doing business in the United States. Congress should also pass a ban on Chinese-sourced and manufactured EVs (including software or technology owned by China).
The next U.S. trade representative should make it a top priority of any negotiations with other countries to include restrictions of China’s mining rights on their lands, a ban of the sharing of intellectual property with China, and a ban, or at least tariffs, on Chinese-made cars sold in that country. These steps would drastically reduce China’s ability to manipulate domestic and foreign markets.
Competitors but also Allies
Europe, Japan, and South Korea are competitors but also allies. They should start acting as such. The emerging Chinese auto industry poses an existential threat not only to the U.S. but also to Europe, Japan, and South Korea’s automakers, workers, and independence. A fortified relationship between the U.S. and our allies would serve as a bulwark against the threat of the Chinese, while simultaneously strengthening our respective auto industries.
The first step is acknowledging that there should be reciprocity in trade practices. Most European countries, for example, charge a 10 percent tariff on U.S. vehicles sold in their country, while the U.S. only charges 2.5 percent. The next U.S. trade representative should work to have our European allies lower their tariffs to match the rate that the U.S. offers them, or mutually remove the tariff altogether.
Another barrier to car sales between our countries is the myriad of differing safety standards set by each country. Standardizing safety requirements between countries would drastically reduce costs, speed up development, increase competition, and allow more profitable niche vehicles to be created, while finally opening up more foreign markets to U.S. vehicles.
Additionally, the U.S. and our European and Asian allies should standardize the environmental impact information required on EV window stickers to include the country where the rare earth materials were mined, the environmental impact of manufacturing and recycling the battery, and the emissions level of an average nightly 12-hour charge.
Drill, Baby, Drill
President-Elect Trump has promised to immediately kickstart America’s oil drilling and refining capacity to make the U.S. not only energy independent but also energy dominant in the world. That means reversing the Biden administration’s cancellation of the Keystone XL Pipeline and of oil exploration in the Arctic National Wildlife Refuge, as well as quickly approving leases on oil and gas exploration.
Why is this important for the auto industry? The U.S. experienced a dramatic increase in oil prices under the Biden administration due to its heavy-handed environmental policies, cancellation of already approved oil drilling projects, and unstable relations with the Middle East and Europe. This contributed to the astounding rise in inflation during Biden’s term in office, stalling new car sales. As American’s strong preference for internal combustion engines continues in the face of competition from EVs, it is more important than ever for America to provide abundant oil and gas for its citizens.
Being “energy dominant” means the U.S. can offer oil to our allies at a rate that is likely more affordable than the regimes they currently buy from. This would be an opportunity for Europe to justify easing its unobtainable EV mandates and opening their car markets to more U.S. vehicles, while also defunding regimes that use oil profits for terrorism and war.
Appoint an ‘Auto Czar’
These actions would require broad policy changes and negotiations. Trump should appoint an “auto czar” who reports directly to him and has authority to coordinate with each of the agencies involved. This appointee would also meet with the leadership and workers of automakers to gather feedback and talk through solutions for streamlining regulations and expanding manufacturing capabilities in the U.S.
A large percentage of U.S. auto workers and much of Detroit voted for President Trump in 2024 because the policies of the Biden administration had put the auto industry in a weakened and desperate position. They felt strongly that Trump could save the American auto industry, their jobs, and their way of life. Appointing an auto czar would be a clear and meaningful action that recognizes voters’ concerns and sets the auto industry on the right course again.
The U.S. auto industry is at a tipping point. Another presidential term of continuing the status quo would mean the bankruptcy and dissolution of at least one, or maybe two, of the Big Three automakers, with China eagerly waiting to fill the void. Trump has an opportunity to take bold action to reverse the current course of our auto industry. Our country’s workers, future, and indeed independence hang in the balance, but the roadmap laid out here would help put America’s automakers back in the driver’s seat of innovation, success, and greatness.
Matthew Craffey of Los Angeles has a bachelor’s degree in political science from California Lutheran University and is Chairman of the Log Cabin Republicans of California.