Trump's 'OK' to Chinese cars built in the US just turned Ford and GM's ban push into defense — BYD and Geely own the move

Speaking to Laura Ingraham on Friday, President Trump said that \"if China wanted to come in and open a plant to build their cars here, I'd be okay with that,\" and pointed to Japan as precedent: \"Japan does it, but they hire our people. The big thing is they hire our people.\" He drew one sharp line: he does not want Chinese automakers to build cars in Mexico and ship them to the United States.

BYD is the lowest-cost producer in the global auto industry. Its cheapest EV retails at roughly $10,000 in some emerging markets — two to three times cheaper than a comparable US-built model. That cost gap is the entire prize: if BYD can build at US labor cost while preserving its scale advantage in cells, motors, and electronics, the unit economics of a $25,000 US-made BYD versus a $35,000 US-made Ford or GM compact EV change overnight. The capital is there — BYD had 869,600 employees on its books as of mid-2026 and ran RMB 28.9 billion of R&D in the first half.

Geely announced a manufacturing joint venture with Ford at Ford's Valencia, Spain plant on July 23, 2026 — operations scheduled for the first half of 2027, with Geely's EX2 electric vehicle slated for the line. The deal is the prototype for the US play: an incumbent Western OEM contributes an idle plant and a dealer network; the Chinese OEM contributes a competitive EV platform. Geely and BYD had earlier been finalists to buy the idle Nissan–Mercedes-Benz plant in Aguascalientes, Mexico — a 230,000-vehicle-capacity site that Trump's Mexico exclusion now puts out of reach as a US launch pad.

Four days before Trump's plant comment, Transportation Secretary Sean Duffy wrote directly to Ford CEO Jim Farley citing the automaker's CATL licensing deal at Marshall, Michigan, its Valencia JV with Geely, and unspecified BYD discussions as \"profound\" national-security concerns. Duffy also flagged Ford's decision to keep building the Lincoln Nautilus in China until 2030. Ford called the letter \"wrongheaded\" and pointed out it owns the Marshall plant, controls operations, and employs the workforce. The dueling signals from the same administration — open the door to Chinese plants, blast Ford for doing deals with the Chinese — leave the company with no clean path.

For Ford, the pain is acute: a TTM net loss of $7.4 billion on essentially flat revenue means every incremental policy shock flows straight to the bottom line. GM's net income is positive but its diluted EPS has fallen from $6.37 in FY2024 to $1.98 on a TTM basis — a 69% compression driven by tariff costs (the industry has absorbed $35.4 billion in tariff expense since 2025, per Automotive News) and EV write-downs.

Short-term (days to quarters), three things move first. First, the Connected Vehicle Security Act — the bipartisan Dingell-Moolenaar bill that would statutorily ban Chinese connected vehicles — is still live in the House even after Trump's pivot; whether congressional leaders treat Trump's comment as a green light to slow the bill or as a signal to harden it tells you which way the political capital flows. Second, the USMCA joint review formally opened in July 2026 with a proposed tightening of auto rules of origin from 75% to 82% North American content (50% US) — a higher bar that would benefit US-located Korean and Japanese transplants and penalize any new Chinese-built US plant that has not yet built out a domestic supply chain. Third, Ford's response to Duffy's letter — and any decision to unwind the CATL licensing deal at Marshall or the Geely Valencia JV — would crystallize the cost of being a Chinese-partnered OEM in the US.

Long-term (one to three years), the structural shift is the localization curve. BYD and Geely have publicly signaled US-plant readiness; if even one major Chinese OEM commits to a US gigafactory-plus-assembly complex, the cost-basis of US compact EVs resets and Ford's and GM's remaining EV programs face a structural pricing problem. Conversely, the Trump administration's simultaneous posture — invitation to build, hostility to existing Chinese ties — may force BYD and Geely into the same partnership structure they used in Valencia, in which case Ford and GM collect JV economics but surrender the brand. Either way, Hyundai and Kia — already US-localized, USMCA-compliant, and untouched by any Chinese-deal controversy — sit in the protected center of the new map.