The U.S. auto industry, once the cornerstone of American manufacturing and innovation, is grappling with a staggering $3.3 trillion trade deficit, according to a report by the Information Technology & Innovation Foundation (ITIF). The industry's decline has accelerated in recent decades, with its share of global auto production plummeting from 46% in 1965 to just 14.7% today.
Domestically, the Big Three automakers—Ford, Stellantis, and General Motors—have seen their market share shrink from 92% in 1965 to 38% in 2024. While newer American companies like Tesla have gained traction in electric vehicle sales, foreign competitors dominate the U.S. market, with international automakers producing 4.9 million vehicles in the U.S. compared to the Big Three's 4.6 million.
Strategic Risks to National Security
The report underscores the auto industry's critical role as an “enabling industry,” vital to the U.S. manufacturing ecosystem and national security. The sector’s decline threatens industrial capacity and expertise necessary for producing defense goods and dual-use technologies.
The United States must act, and act now. The United States can still rebuild auto competitiveness if it treats the sector as what it is: a strategic industry tied directly to national power.
China has emerged as a dominant force in global auto manufacturing, particularly in electric vehicles (EVs) and battery production. Despite U.S. advancements in EV technology, Chinese automakers like BYD have outpaced American companies, with China investing heavily in next-generation battery research and EV subsidies.
The U.S. auto trade deficit, which accumulated $3.3 trillion between 1963 and 2023, highlights the industry’s vulnerability to foreign competition. ITIF warns that without immediate action to revitalize the sector, the U.S. risks falling further behind in a critical arena of its competition with China.