Need some new wheels? You can buy a new 2026 Jaecoo J5 compact SUV for the equivalent of just $18,400, out the door, all fees and taxes included and with a list of features that includes keyless entry, LED lighting, six-speaker audio, adaptive cruise control and an 8-year warranty.
If you are lucky enough to live in Australia.
Here in America, the search for a new car with a sticker price under $20,000 offers you a choice of precisely one vehicle out of the hundreds to be found at your local dealership. That would be the bare-bones Nissan Versa, still far more expensive than the Jaecoo, once destination and other fees are added. The cheapest compact SUV on offer in the U.S.? That’s most likely the Mitsubishi Eclipse Cross, costing at least $30,000 out the door. If you get suckered into the extended warranty, probably more.
Aussies who are sick of the elevated price of gas, by the way, can buy an electric version of that Jaecoo J5 for just $5,000 more, massively undercutting Hyundai’s Kona Electric, likely the cheapest electric SUV you can find in the U.S.
Why the disparity? The simple answer is that U.S. automakers decided the best way to combat the rising costs of unionized labor, which has secured massive gains, and ballooning material expenses was to chase the higher profit margins that come from the bigger SUVs, now the vehicle of choice for a broad swath of Americans.
We’d also add that decades of protectionist policies in the U.S. auto industry and a lack of fresh competition have not exactly been to the advantage of American consumers.
The numbers above certainly tell that story.
The average price of a new vehicle in the U.S. has shot north of $50,000, a figure unaffordable for a large number of U.S. households who find themselves trapped in increasingly daunting finance contracts. According to Edmunds, some 23% of car buyers in the first quarter of this year agreed to a loan of 84 months or longer. A decade ago, that was just 10%. And, of course, any attempt to replace a car within that time is likely to result in negative equity, meaning that car buyers have to finance not just their new car but the remaining balance on the car they are trading in for that fresh buy. So for many middle-class Americans, the choice is between a dangerous amount of debt or no new car at all.
Hardly an ideal situation.
U.S. automakers know all of this, of course, and this has led to a frantic effort to stop Chinese vehicles from arriving on U.S. shores. The cars already can be found at Mexican new car dealers, some located not far from the U.S. border in both California and Texas. The Trump administration has slapped heavy tariffs on these Chinese vehicles — close to 250% — and unleashed other weapons to protect U.S. dealers and manufacturers including regulatory bans on some Chinese-developed software used in the vehicles.
That’s bad news in turn for some U.S. manufacturers, like Tesla, since China has retaliated in the trade war.
Those Chinese vehicles can, though, legally be driven into the U.S. by Mexican residents with Mexican driving licenses, and that has the U.S. auto dealers worried that folks in California are seeing these cars, hearing about how little they cost and starting to rebel against high U.S. prices. The Wall Street Journal reported last week that several U.S. senators and House members have been making rumblings not just about banning the stateside sale of the Chinese-made Mexican cars but going so far as not allowing Mexican or Canadian drivers to bring them into the country at all, something of a drastic step.
Given China’s adversarial relationship with the U.S. and its history of strategic dumping for non-market reasons, a good case can be made that it is not in our national interest to open our huge market to these vehicles, especially since today’s internet-connected cars are essentially computers on wheels, transmitting and receiving all kinds of information.
Nonetheless, prohibiting international drivers from bringing their own cars into the country feels motivated not so much by worries about national security but by fear that American consumers will catch sight of these vehicles, do a cost-benefit analysis and wonder why they cannot buy one here. After all, even if you take the U.S. automakers at their word when they say they could not compete with this kind of pricing, and we do, let’s remember that nobody forced Detroit to give the United Auto Workers the deal they won. Anyone could see at the time that this would greatly increase prices. That is exactly what has happened.
But if protection is what most of them are demanding, U.S. automakers then have an obligation to pay attention to the market and start building more affordable cars. We’ve essentially ended up now with an industry that caters almost entirely to the affluent consumer, meaning that a new car, once an essential part of the American dream, has become unaffordable and unattainable to far too many Americans, forcing them into the used car market, where the risks are higher.
That should not be the case. We need far more U.S.-made automobiles that Americans can afford to buy. Without moving to Australia.
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