- New bans on Chinese software and hardware will effectively ban Chinese vehicles on U.S. soil.
- The rules are set to go into effect in 2027 and 2029, respectively.
- The Trump administration must finalize the new rules before they will go into effect.
Biden Administration Finalizes Rules Effectively Banning Chinese Cars in the U.S.
The Biden administration will leave the final call up to the incoming Trump administration
As President Biden’s administration readies itself to leave the White House this month, it has finalized rules that effectively ban Chinese vehicles from the U.S. market. "It's really important because we don't want two million Chinese cars on the road and then realize ... we have a threat," Commerce Secretary Gina Raimondo told Reuters. Commerce Secretary Raimondo cited national security concerns around Chinese software.
The ban centers around Chinese software and hardware used by automakers operating in the U.S. already. In September, Raimondo proposed the ban on software starting in the 2027 model year, with the ban on Chinese-made hardware beginning in 2029. On top of the ban on goods, the new federal rules will bar Chinese car companies from testing self-driving cars on the road here in the U.S.
However, there is a loophole: The ban will not cover Chinese software made before these new rules take effect as long as it is not being maintained by a Chinese firm. (This echoes what's happened with the looming ban on TikTok, which is set to go into effect on January 19 if the company is not sold to an American entity.) Automakers have pushed back against the ban, and it's worth noting that it excludes vehicles over 10,000 pounds, allowing Chinese companies to continue to produce electric buses for U.S. markets like California.
Polestar, owned by the China-based conglomerate Geely, says it would effectively be unable to sell cars here, though an official told Reuters the company may be able to seek special authorization. GM, Toyota, Volkswagen and Hyundai said they needed another year to meet the 2029 hardware requirement. Some others, like Volkswagen and Hyundai, told Reuters they may need to source alternate suppliers.
In addition to the ban on software and hardware, the Biden administration earlier approved a massive 100% tariff rate on Chinese electric vehicles, up from 25% in 2024. In its statement, the White House cited a 70% year-over-year increase in Chinese EV exports from 2022 to 2023.
The incoming Trump administration must make the final decisions on the rules enforcing the 2027 software and 2029 hardware bans. However, it isn’t clear to what extent the administration intends to uphold these new rules. President-Elect Trump told Reuters: "We're going to give incentives, and if China and other countries want to come here and sell the cars, they're going to build plants here, and they're going to hire our workers.”