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By Scott Paul
President, Alliance for American Manufacturing
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President Donald Trump seems to have gone off script on China. In his first term and early in this one, he set himself apart from his predecessors by recasting the U.S.-China trade relationship in much more realistic terms, unafraid to impose tariffs and other measures to recalibrate trade flows and derisk supply chains. For American industrial workers battered by decades of factory closures and trade cheating, this was a welcome change.
But Chinese leader Xi Jinping has played his cards well, applying pressure by restricting access to critical minerals, manipulating the value of the renminbi, erecting barriers of his own and establishing workarounds by routing goods through third countries to blunt the economic impact of the U.S.-imposed tariffs. While the U.S.-China trade deficit has shrunk, China has maintained a massive trade surplus overall—a record $1.2 trillion last year.
Now Xi is coming to Washington for a high-stakes summit on September 24. And while Trump has indelibly altered the bilateral trade dynamic, he risks squandering any leverage he’s created if he ignores China’s three big "C's" that spell trouble for American manufacturing: cars, currency and chips.
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First cars. China’s auto industry is taking over the world. Decades of stacked subsidies—whether for energy, metals, batteries or the autos themselves—as well as technology transfer and supply chains utilizing forced labor have created an export behemoth. In 2024, we called it an "existential threat" to America’s own auto jobs, and lawmakers and auto CEOs agree. But Trump twice now has indicated he might be OK with Chinese auto factories in America while keeping imports out. The auto sector is the heartbeat of an extensive manufacturing ecosystem in our nation. Handing over the keys to potential adversary makes no sense at all. Imagine trying to mobilize a foreign-owned industrial sector in a time of national crisis.
Trump has made a point of attracting foreign investment into our economy and, in many cases, it has economic benefits for American workers. But if he allows this he would go down in history as our nation's King Priam, the leader who let the Trojan Horse in.
Next, consider China’s currency. Unlike the U.S. dollar, China’s renminbi isn’t freely floating. Through daily exchange rate management, capital controls, a system of state-owned banks and other mechanisms, Beijing suppresses its value. Despite some nominal strengthening over the past 18 months, the currency remains devalued and that, in turn, lowers the effective price of Chinese exports across the board.
As such, this currency manipulation blunts virtually all U.S. trade enforcement mechanisms. Whether it’s a Section 301 tariff or an anti-dumping duty, China’s devalued currency offsets those penalties, and the data bear that out as well. China’s exports to the United States grew 34.4 percent year-over-year in August despite a raft of U.S. tariffs in place.
This is market manipulation, and yet the Trump administration has taken no action to address it. It’s not as if the executive branch lacks tools here. The Treasury Department can formally confront exchange rate manipulation; the U.S. trade representative can increasingly target currency practices into Section 301 enforcement efforts; and the Commerce Department can pursue currency-related countervailing duty actions. But the administration has conspicuously refrained from doing so.
Lastly, consider China and computer chips. President Trump has shown great willingness to stand up the domestic production of semiconductor chips, building on efforts launched during the Biden administration. He secured a $200 billion reshoring commitment from chipmaker Micron, acquired a significant stake in chipmaker Intel and has made federal investments in dozens more. But he simultaneously entertains complaints from the CEOs of multinationals—like Nvidia chief Jensen Huang, arguing for the right to sell the high-end chips built for military platforms to China—and acquiesces.
This calls into question the president’s commitment to truly reshoring microelectronics and derisking U.S. supply chains that are dependent on this crucial industry. Are we doing this, or are we not? It’s caveats like these that undermine the president’s larger goal of rebuilding U.S. chipmaking, which I have supported. If the president insists on issuing them, he must understand that his goal will not be successful.
It’s not a foregone conclusion that Trump will allow Chinese auto manufacturing in the U.S., ignore China’s currency manipulation, or muddy the waters on rebuilding microelectronic manufacturing here. But he has backed away from confrontation with Beijing before—failing to enforce the Phase One agreement negotiated in 2019, lowering sky-high tariffs when faced with retaliation in 2025 and deferring action on shipbuilding and other key sectors.
This president’s approach to China has mostly been clarifying. Whether it was Clinton, Bush or Obama, earlier administrations allowed themselves to be ensnared by endless, circular dialogues that solved nothing while our trade deficit yawned and our economy deindustrialized. The Trump administration, commendably, has not. The bilateral “Board of Trade” proposal that resulted from Trump’s Beijing trip, for instance, was appropriately limited to “nonsensitive” goods. And Trump has erected tariffs on many unfairly traded Chinese imports and maintained them for years.
But these three issues—cars, currency and computer chips—are remarkably out of step with the bulk of the president’s trade position with China. It would make much more sense if it were all marching together.
Scott Paul is president of the Alliance for American Manufacturing.
The views expressed in this article are the writer's own.
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