US obsession with Chinese cars turns to paranoia

The US government is stepping up its crackdown on Chinese cars, which it wants to prevent from entering the country in large numbers. This time, it is about banning Chinese software and hardware from connected vehicles in the United States. The White House has launched an investigation into potential national security risks, reports Reuters in an article dated September 23, 2024.

The goal? To prevent cars made in China from becoming potential spies or, worse, threats on wheels controlled remotely by a foreign government. In concrete terms, if the proposal passes, American manufacturers will have to purge their vehicles of all Chinese technology by 2029. This decision is officially justified by the fear of sensitive data collection by foreign powers. But is this not a pretext for a protectionist measure for the American automobile industry?

Cars, robotaxis and trucks would be banned

This initiative comes in the context of a hardening of trade relations between the United States and China. Several sectors, including telephony and entertainment (TikTok), are already in the crosshairs of the American government.

In a first act, it was decided to increase customs duties by 100% on Chinese electric vehicles, as well as on components from China (batteries, in particular). However, Chinese manufacturers were able to find ways around this by setting up factories with a local supply of parts in countries bordering the United States. The text currently being drafted would further tighten the restrictions.

The proposed rule would affect all connected vehicles on U.S. roads, except those used in agriculture or mining. Drones and trains are also currently excluded from the new rule. Chinese self-driving cars would also be banned from U.S. roads, including for testing purposes. The ban on Chinese software would go into effect as early as 2027, while the ban on hardware would begin two years later, in 2029.

Consequences for manufacturers, including national ones

Automakers will have to prepare for potentially costly adjustments. General Motors and Ford, for example, will have to stop selling vehicles imported from China to the United States. In addition, the rule would force companies to gradually replace their Chinese technologies with (preferably American) alternatives, which could upend their supply chains.

The Automotive Innovation Alliance, which represents major automakers like GM, Toyota and Volkswagen, is already warning that some companies may need more time to comply with the new requirements. China’s Geely, which already has a presence in the United States with Volvo and other brands, may have to do some serious gymnastics, even if production is done in the United States.

A controversial measure that could be extended

The Biden administration doesn’t want to wait until the U.S. auto fleet is saturated with Chinese vehicles. These vehicles are extremely rare in the U.S. right now, but fears that these cars will collect sensitive data or even be hacked in the event of diplomatic tensions are pushing the United States into action. Chinese automakers will be able to apply for exemptions, but the message is clear: Chinese technology is no longer welcome on American roads.

China, for its part, is fuming and calling on the United States to play the fair trade game. In the meantime, there are only 30 days left for the public to comment on this proposal.

Such a measure is primarily aimed at China. However, it would also apply to Russian software and hardware, and could be extended to other countries deemed problematic. And why not Europe later? That would be a particularly effective protectionist measure.