Trump Could Make U.S. Cars Less Competitive

“These are improvements the auto companies could have made in prior years but didn’t, and only did now because they were required to do it” by new fuel efficiency regulations, says Dan Becker, director of the Center for Biological Diversity’s Safe Climate Transport Campaign. Car companies are calling for watering down rules, he argues, because “they want to be able to cheat and get away with it.” GM was caught doing exactly that this year, and is being forced to pay a $145.8 million penalty after a multiyear federal investigation found GM vehicles from the 2012–2018 model years had emitted 10 percent more carbon dioxide on average than the company’s compliance reports claimed. 

The “Big Three” U.S. automakers (Ford, GM, and Chrysler owner Stellantis, a European firm) have specialized in building big, expensive cars and largely ceded the market for smaller vehicles to foreign automakers. A series of heavy tariffs targeting Japanese-made cars throughout the 1980s and ’90s sought to protect Detroit as consumers drifted toward more fuel-efficient, foreign-made vehicles amid rising gas prices. Those measures incentivized foreign firms to build plants here—mostly nonunion, mostly in the American South, as it turned out—in order to avoid levies on models made abroad. The result has been a loosening of the Big Three’s dominance over the U.S. auto market. In 1978, the Big Three sold almost 95 percent of cars bought in the U.S. By 1989 their market share had dropped below 70 percent; in 2023, it had dipped below 40 percent. 

By continuing and expanding upon the first Trump administration’s tariffs, the Biden White House hoped to once again protect domestic automakers—the Big Three, especially—from foreign competition, this time from China. Trump may well exacerbate that trend, while also removing whatever modest incentives legacy automakers had to catch up.