If 6% of your economy is directly tied to auto manufacturing (Germany) than by allowing ultra-cheap cars to flood the market will just piss off workers who inevitably get laid off in the chaos. Europe is starting to catch up on competing with price again (see Citroen for examples) but it takes time to build these factories and there is a lot more red tape wade through.
The US is trying to tackle the affordable car space through weird startups and longshots, but their production numbers will be so much less than demand for another decade if they even gain real traction in the market at all.
If a country wants to give up on their own automotive exports that's fine, but they need a plan for how to proceed when those jobs are gone and so far nobody has that plan figured out yet. Until then, they will continue to tariff the crap out of any competitors and keep kicking the can down the road.