On November 2, the Alliance for Automotive Innovation urged Congress to pass a bill permanently banning Chinese cars. U.S. media hit the nail on the head: protectionism will turn the U.S. auto industry into "an isolated island." A natural question arises: the U.S. is building walls, so why doesn't China retaliate in kind against American cars? The answer lies not in emotions, but in the comparison of two sets of facts.

U.S. cars have made money in China, but today's problem is not that China won't let them sell

General Motors spent twenty years in China reaching a peak annual sales of 4 million vehicles, with profits in China once as high as $2 billion; Ford still achieved about $600 million in profit in China in 2024.

American cars have never been "locked out" by China—Buick GL8, Cadillac, Lincoln, and Tesla are all produced and sold in China. The real problem is: the market share of American cars (excluding Tesla) in China has fallen from 12.5% in 2017 to less than 4%, Changan Ford's retail sales in 2025 were only 99,400 vehicles, and Chevrolet had only just over 8,000 vehicles for the entire year.

The fundamental reason for the decline of American fuel vehicles in China is not that Chinese consumers are boycotting them, but that American automakers apply a globally uniform product logic to the Chinese market: the inertia of investment in fuel vehicles remains unchanged, and intelligentization and electrification lag two to three generations behind same-class domestic brands. The 800V high-voltage platform and advanced intelligent driving that are standard on domestic cars at the same price point are completely absent from American fuel vehicles.

China has not boycotted American cars; the market is voting with its feet.

Tesla's "exception" is becoming "a normal problem"

Tesla is the only foreign automaker in China producing vehicles domestically through a wholly owned subsidiary and has enjoyed full market access. But its good days have not come without a cost.

In 2025, Tesla's sales in China were 626,000 vehicles, showing negative annual growth for the first time; in the first quarter of 2026, its retail sales in China fell 16.2% year-on-year. The Model 3 and Model Y have not had major facelifts for years, while Chinese automakers iterate at a pace of "one facelift per year, one generation change every two years." Xiaomi SU7's retail sales in 2025 already led the Model 3 by nearly 60,000 vehicles.

Tesla's per-vehicle profit margin remains in double digits, exceeding 10%, far above the industry average, but this model of "making money without facelifts" is being eroded bit by bit by the iteration speed of local competitors.

In the future, Tesla will not suddenly "stall" in China, but its market share sliding from 6% to 4.9% shows that the depreciation rate of brand halo is faster than the pace of model facelifts.

A permanent ban is likely to land, but it cannot block the global presence of Chinese automakers

Judging from legislative conditions, the probability of this bill passing is not low: the Alliance for Automotive Innovation's lobbying has gained support from bipartisan lawmakers in several key auto-producing states, current tariffs already exceed 100%, and the House of Representatives previously passed connected vehicle safety legislation. The ban is merely upgrading administrative restrictions into permanent legislation.

Even if passed, its practical effect is limited—Chinese automakers have long been kept out of the U.S. market by tariffs, and the ban only legally confirms an established fact.

The real cost is borne by the U.S. industry itself: in Mexico, the market share of Chinese brands has surged from less than 1% to 15% over the past five years, occupying about 90% of the local EV market; the share of American cars in Asia, Europe, and Latin America is either declining or stagnating. The following are the total sales of the top 10 best-selling automaker brands in the U.S. from January to September this year.

Sealing off the U.S. market will not make Chinese automakers disappear; it will only keep American automakers in a protected greenhouse, continuing to lag behind the real pace of global competition.

The advantage of Chinese EVs is not subsidies, but structure and efficiency

A Rhodium Group report has already punctured the narrative that "China relies on subsidies": BYD produces nearly 80% of its core components in-house, more than twice that of Tesla; the Seal saves about $2,369 per vehicle in supplier markups compared with the Model 3, and BYD's gross margin in 2025 was 20%, higher than Tesla's 18%.

UBS predicts that even as protectionism rises, the global market share of Chinese OEMs will still grow from 25% in 2025 to 35% in 2030, and Chinese EVs are expected to account for about one-third of the global market.

This is not a narrative of "completely defeating the United States," but a more plain fact: the cost structure formed by vertical integration, economies of scale, and iteration speed cannot be moved by tariffs and bans.

Returning to the original question: China does not retaliate in kind against American cars, not because it is weak, but because an industry that already holds structural advantages in open competition does not need to close its doors to prove itself. The Alliance for Automotive Innovation begging Congress to build walls precisely shows that they understand better than anyone: under fair competition, they are already finding it very hard to win.