China's rise as a global powerhouse in electric vehicles has raised concerns within the U.S. auto industry as Chinese automaker BYD surpasses Tesla in global EV sales. A report by the Alliance for American Manufacturing highlights the threat posed by Chinese firms, particularly their heavy investments in factories in Mexico to access the U.S. market through more favorable tariffs under the United States-Mexico-Canada Agreement (USMCA).

The report warns that Chinese automakers, such as MG, BYD, and Chery, are strategically setting up manufacturing facilities in Mexico, increasing imports of Chinese cars into the country. This move enables Chinese EVs to potentially flood the U.S. market, circumventing existing tariffs that have limited their entry.

Lawmakers have expressed concerns about China's industrial strategy to dominate the global automobile market, emphasizing the need to maintain or increase tariffs on made-in-China cars to prevent a "coming wave" of Chinese vehicles from entering the U.S. market through Mexico.

With BYD leading the pack and benefiting from the support of Warren Buffett's Berkshire Hathaway, concerns are raised about the potential impact on U.S. automakers. The Alliance for American Manufacturing underlines the threat of cheap Chinese autos backed by government support causing an "extinction-level event" for the U.S. auto sector.

Ford CEO Jim Farley and GM counterpart Mary Barra have hinted at potential collaborations to address the Chinese threat, recognizing the need for strategic responses within the industry. The looming challenge of Chinese automakers gaining access to the U.S. market through Mexico is recognized as a serious threat that could reshape the landscape of the American auto sector.

The auto industry faces a pivotal moment as the rise of Chinese automakers utilizing Mexico as a backdoor raises concerns about the future of U.S. auto manufacturing and competitiveness in the global market.