US to Target Chinese Connected Cars Over National Security

A day after US President Joe Biden sharply increased tariffs on Chinese electric vehicles, Commerce Secretary Gina Raimondo said Washington will soon issue proposed rules on China-made connected vehicles.

“We expect to have a rule out this fall,” Raimondo told a US Senate committee on Wednesday, but declined to comment on what the rule may look like.

“The national security risks are quite significant … We decided to take action because this is really serious stuff,“ Raimondo said.

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She added that connected vehicles “have thousands of sensors, thousands of chips – they’re controlled by software, which is coming from Beijing in the case of Chinese-made cars. They know where the driver goes, what the driving patterns are, what you’re saying in your car. It’s a lot of data around US persons that goes right back to Beijing.”

The commerce secretary’s statement comes after she last week said the United States could take “extreme action” and ban Chinese connected vehicles.

In February, the Biden Administration launched a probe into whether Chinese electric vehicles pose national security risks.

At the time, the White House said the probe was needed as connected vehicles “collect large amounts of sensitive data on their drivers and passengers (and) regularly use their cameras and sensors to record detailed information on US infrastructure.”

Connected cars have onboard integrated network hardware that allows internet access, allowing them to share data with devices both inside and outside the vehicle.

“It’s not totally different than the threat of TikTok, which Congress took action on,” Raimondo said on Wednesday, referring to legislation passed last month that seeks to force Chinese parent company ByteDance to divest TikTok’s US assets or face a ban.

She reiterated prior comments that “you can imagine the most catastrophic outcome theoretically if you had a couple million cars on the road and the software were disabled.”

Eyes on Chinese cars made in Mexico

Asked if the planned rule could cover Chinese automakers’ vehicles assembled in Mexico, Raimondo said: “We have to figure it out. It’s still in the process.”

The Commerce secretary said at the hearing her department was tracking public reports that Chinese automakers were planning to assemble vehicles in Mexico.

She added that she wants to ensure they cannot avoid new US tariffs.

“We are going to do whatever we need to do to make sure China doesn’t use Mexico to end run around these new tariffs,” Raimondo said.

The Chinese foreign ministry previously urged the United States “to respect the laws of the market economy and principles of fair competition.” It argued that Chinese cars were popular globally not because of “so-called unfair practices” but because they had emerged out of fierce market competition and were technologically innovative.

There are relatively few imports of Chinese-made light duty vehicles in the United States.

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Reuters, with additional editing by Vishakha Saxena

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]