When Stellantis NV Chairman John Elkann this week explained his concerns with costly U.S. tariffs, he made sure to draw a comparison with growing automotive powerhouse China.

Both the American and European auto sectors are struggling to navigate "extreme" policy and regulatory pressures — including the new import tariffs — as China's industry grows at a higher trajectory, the Jeep and Ram executive told investors in Amsterdam. China's car market, Elkann added, is set to become larger than the combined American and European markets for the first time this year.

Rival auto leaders have recently sounded similar alarms, just as President Donald Trump's 25% tariffs on cars and related industries start to bite. Their message: managing higher tariff costs, related supply chain headaches and shifting manufacturing footprints is detracting from what they should be focused on — catching China and its increasingly dominant electric vehicle sector.

John Lawler, Ford Motor Co.’s vice chair, said at a Wednesday autos summit that the Dearborn automaker still believes it must be a "global player" — one that can take on the Chinese as they look to dominate car markets around the world.

"If we get pushed back into just operating here in the United States and being a U.S. automaker, you know, large profit, but where does that put us as a company in 10 to 15 years?" Lawler asked. “We have to compete, and we have to learn to compete globally against the best that are out there. And that's what we’re doing.”

Stellantis didn't provide figures to support Elkann's claim that China's car market will outpace the United States and Europe combined this year, but the trend is unmistakable: Last year, China sold 31.4 million vehicles, up 4.5% from 2023, according to the China Association of Automobile Manufacturers. That was not far off the combined American and European sales of roughly 32 million, which grew at slower rates.

"It's inevitable that China's car market will eventually surpass that of the United States and Europe, just as its production has, just as its exports have," said Michael Dunne, CEO of Dunne Insights LLC and an expert on the country's auto industry.

China was once a fast-growing market for Detroit's automakers and other foreign brands, but their share of sales has plummeted thanks to homegrown EV companies fueled by government subsidies and other incentives. Dunne said the market share of outside automakers in China rapidly tumbled by more than half in the past five years, from 64% in 2020 to an expected share below 30% this year — a decline equal to about 8 million cars.

As they dominate at home, Chinese automakers such as BYD Co. Ltd. also are pushing their vehicles into such other global markets as Thailand to Mexico, contributing to larger foreign sales challenges for automakers like Stellantis, Ford and General Motors Co. Dunne, a former GM executive, recently posted a graph on X showing the Detroit Three's share of global car sales is down to 13% this year from 29% in 2000, citing Bernstein Research and IHS data.

“Everything that happens in China is unprecedented,” said Tu Le, managing director of consulting firm Sino Auto Insights. “Everything is larger. Once that machine gets moving in that direction, it’s hard to stop.”

Tariffs have served as a critical tool to prevent China's cheaper EVs from proliferating in the United States and Canada. Even before Trump took office, the United States had slapped levies of more 100% on electric cars from the country, with Canada taxing them similarly. Meanwhile, a number of U.S. governors and state development agencies made clear they won't let Chinese automakers invest in their states.

Trump's latest set of massive tariffs on China's metals aims to put the country on its heels amid its recent dominance in car exports and other industries, such as solar panels, Dunne said. The current trade war very well could have positive results within several months, he said, bringing the United States and key allies to a resolution that helps them collectively fight back. Yet there is a risk that these trade tensions drive some countries in Europe more toward embracing China and its EVs.

"China's moving very quickly to capitalize on the chaos that we're now experiencing, to say to Europe, 'Hey, we're the more stable partner, we have the technologies of tomorrow. Let's cooperate. We'll exchange our technology for market access in Europe, and everyone will live happily ever after,'" Dunne said.

North American auto companies largely see the new tariffs on the industry as a high-priced distraction — sucking up time, technical talent and precious capital that could be used on investments elsewhere. One recent estimate from the Center for Automotive Research said the new import taxes could create an additional $41.9 billion in annual costs for the Detroit Three, potentially erasing most of their combined profits. The companies booked $17.7 billion in profits last year.

Suppliers have raised concerns as well, with 25% taxes on imported parts now expected to take effect by early May. Pat D'Eramo, the CEO of Martinrea International, a large auto parts supplier headquartered in Ontario with factories in the United States and Mexico, last month likened the tariffs to "rearranging the chairs on the Titanic" in North America as China bears down.

Instead of spending time and money on tariffs, he said, "we need to figure out how to catch up."

Glenn Stevens, executive director of MichAuto, the automotive arm of the Detroit Regional Chamber, said the United States should be developing even stronger ties with Mexico and Canada to compete with China's automotive dominance, not the opposite. Managing tariffs, he argued, is a distraction for companies that want to be spending time and resources innovating better designs and improving engineering and manufacturing processes to bring vehicles to market faster.

China "is absolutely innovating in every facet of the automotive industry, and it's globally expanding virtually everywhere," Stevens said. "That is the competition."

Even before the Trump tariffs kicked in, the American auto industry was falling behind its global rivals, including China, Le said: “There’s this narrative now that the tariffs are putting the United States behind by five years, seven years. That was already the case. We’re behind, and it’s universally acknowledged.”

For all western automakers, Le added, the challenge is culture and speed. Ford's Lawler said product development for Chinese companies is two years, and their vehicles receive frequent over-the-air software updates. Ford is working toward similar metrics with its skunkworks team in California, which develops the automaker's next-generation electric vehicles.

But that leaves questions about the rest of the thousands of employees who work at Ford, in Dearborn and elsewhere around the world: “That’s still not adjusting the culture,” Le said. “It’s creating an entirely different division.”

Even as executives from Ford or Stellantis make speeches flagging concerns with China's growing dominance in global car markets, Dunne said he's still not confident the U.S. industry grasps the full scope of the threat, striking a familiar chord among industry watchers.

"The D3 will need nothing short of a near-death experience to meet this moment," he said. "What's missing when I go to Detroit is a sense of urgency and awareness that it is, in fact, existential.

"CEOs and leaders in those companies continue to make record money," Dunne added. "Bonuses are paid, union wages are sweet. There's a complete lack of awareness that they're just on the edge of a cliff. And if they don't take dramatic steps today, it's inevitable that they'll be in deep trouble."

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