The US Government is finalising rules that will bar nearly all Chinese cars and trucks from the US market.
In a week that has seen the future of Chinese owned social media platform TikTok in doubt and then for incoming president Donald Trump to backflip on the decision, the automotive industry is watching developments with China closely.
It is awaiting on decisions by the incoming Trump administration regarding numerous other tariffs for both cars and materials that have set off an automotive trade war with China, along with policies relating to Mexican imports.
In its first week, the Trump administration abandoned targets for the uptake of EVs aimed at 50 per cent of new vehicles by 2030 and set by the Biden administration in 2021.
Bans finalised
Last weeks move on Chinese imports by the outgoing Biden administration comes as part of a crackdown on Chinese vehicle software and hardware, based on security, in the wake of last year’s steep tariff hikes on imports of its electric vehicles.
In October 2024, member countries of the European Commission voted in favour of increasing tariffs on Chinese EVs. The tariffs will increase levies on battery-powered cars built in China by up to 45 per cent within five years.
Australia is yet to enforce any tariffs on Chinese made vehicles other than those which come under the Luxury Vehicle Tax.
Since the announcement of the New Vehicle Efficiency Standard, to make low emission cars more attractive, Chinese OEMs have lined up to release vehicles in Australia and now rank as the third largest country of origin.
Security concerns
In the US Commerce Secretary Gina Raimondo told Reuters in an interview that the move is centred around national security concerns.
“It’s really important because we don’t want two million Chinese cars on the road and then realize … we have a threat,” Raimondo says.
In September, Raimondo’s department proposed a 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 U.S. roads. The rules also cover Russian vehicles and components.
The U.S. Commerce Department said in the final rules it was making some changes, such as exempting vehicles heavier than 10,000 pounds from the requirements, which would let China’s BYD continue to assemble electric buses in California.
Where to next?
In January, the department said it planned to soon propose rules barring Chinese software and hardware in larger commercial vehicles, including trucks and buses.
In a 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.
In September, the Biden administration finalised 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 20th, wants to prevent Chinese auto imports but is open to Chinese automakers building vehicles in the United States.