China warns auto giants to halt price wars as US tariff tension escalates: Details here

As US President Donald Trump ramps up pressure on Chinese imports with plans to double tariffs on steel and aluminium, fresh turbulence is erupting in China’s auto industry.

The world’s largest car market is facing intense price wars, a situation that Beijing reportedly now calls “unsustainable” and dangerous for long-term industrial health.

According to Reuters, on Saturday, China’s Ministry of Industry and Information Technology (MIIT) issued a rare public warning, urging domestic automakers to stop “brutal price wars” that it says are damaging profitability and destabilising the sector, according to state news agency Xinhua.

This comes at a critical moment. The global auto supply chain is already bracing for impact as the US under Trump signals a hard line on trade.

Washington is preparing to double tariffs on Chinese steel and aluminium exports and talks between Beijing and Washington over broader trade concerns remain deadlocked.

An industry under-price siege

Since early 2023, China’s carmakers have been reportedly locked in an escalating cycle of discount wars.

Leading the latest round is BYD, China’s biggest electric vehicle (EV) manufacturer, which introduced fresh subsidies on over 20 models last week, including government-backed trade-in offers.

According to Reuters, the cost of BYD’s Seagull electric hatchback has been slashed to as low as 55,800 yuan (around $7,750), triggering a domino effect.

Rivals like Geely and Chery have since followed suit with their own price cuts.

The China Association of Automobile Manufacturers (CAAM) also issued a parallel appeal on Saturday, calling the discounting spiral a “panic-triggered” trend that hurts operational efficiency and long-term viability.

“Apart from reducing the price of goods according to law, enterprises shall not dump goods at prices below cost,” CAAM, in a statement released via state media as reported by Reuters.

The organisation advised automakers to uphold fair competition and avoid monopolistic pricing practices.

Internal friction: BYD vs Great Wall

The government’s plea reportedly follows a public spat between industry heavyweights. On Friday, a BYD executive reportedly dismissed concerns about industry instability as “alarmist”, in response to Great Wall Motor Chairman Wei Jianjun, who reportedly warned that cutthroat pricing was hitting not just carmakers, but also their suppliers.

According to Reuters, Wei said the industry was becoming “unhealthy” under the pressure of constant undercutting, a rare admission from a top Chinese automotive executive.

Tariff tensions in the backdrop

This domestic unrest is unfolding just as the external environment becomes more hostile.

Last month, the US slapped fresh tariffs on several Chinese goods, including a proposal to double duties on Chinese steel and aluminium.

This could reportedly disrupt raw material flows crucial to EV manufacturing.

US officials have also raised concerns over the global dominance of Chinese EVs and components, with President Trump promising to “defend American manufacturing”.

Meanwhile, China is reportedly preparing retaliatory measures, although no formal announcements have been made.

According to Bloomberg, US-China trade talks remain gridlocked, with officials struggling to find common ground on tariffs, technology transfer, and market access.

The auto sector, which sits at the intersection of all three, is particularly exposed.

What lies ahead?

As both domestic and international pressure mounts, Beijing appears to be recalibrating its strategy. The MIIT’s intervention reportedly signals that authorities may soon push for industry-wide pricing norms, or even regulatory scrutiny of aggressive discounting practices.

For automakers like BYD, Geely, Chery, and Great Wall, the challenge now is two-fold: navigating rising input costs amid tariff uncertainty, while avoiding a profit squeeze from endless price battles.