Minor Exemptions in US Crackdown on Chinese, Russian Vehicles

The outgoing US government headed by President Joe Biden is finalizing rules that will effectively bar nearly all Chinese cars and trucks from the US market.

There will be an exemption for vehicles heavier than 10,000 pounds, which will let China’s BYD to continue assembling electric buses in California.

But the Commerce Department said on Monday it plans to soon propose rules barring Chinese software and hardware in larger commercial vehicles, including trucks and buses. However, a final decision on that will be left to the incoming Trump administration.

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The move – part of a crackdown on Chinese vehicle software and hardware from China – comes after a steep hike in tariffs on imported electric vehicles, and the Commerce Department saying this month it is considering a similar crackdown on drones made in China.

This was explained by Commerce Secretary Gina Raimondo, who said last week: “It’s really important because we don’t want two million Chinese cars on the road and then realize … we have a [national security] threat.”

In September, her department proposed a sweeping ban on key Chinese software and hardware in connected vehicles on American roads, with software prohibitions to take effect in the 2027 model year and those on hardware in 2029. They also bar Chinese car companies from testing self-driving cars on US roads.

The new rules also cover Russian vehicles and parts.

GM & Ford could get some leeway

In another shift, the department said the bans would not cover Chinese software developed before the new rules took effect, so long as it was not being maintained by a Chinese firm.

That means General Motors and Ford could potentially continue to import some Chinese-made vehicles for US buyers, a senior official told reporters.

The Alliance for Automotive Innovation, representing GM, Toyota Motor , Volkswagen, Hyundai Motor, and other major automakers, unsuccessfully sought an additional year to meet the hardware requirements.

Polestar, the Swedish automaker that is a brand of China’s Geely, warned in October that without changes the Commerce rule would “effectively prohibit” it from selling vehicles in the United States.

An administration official said they expect Polestar will need to seek specific authorization under the final rule. Polestar declined to comment.

In September, the Biden administration finalized steep tariff hikes on Chinese electric vehicle imports and this month it put key Chinese battery company CATL on a list of firms accused of aiding the country’s military.

President-elect Donald Trump, who takes office on January 20, wants to prevent Chinese auto imports but is open to Chinese automakers building vehicles in the United States.