US Finalizes Expanded Ban On Chinese Autos

By Cee Lippens January 14, 2025
Trade tensions heated up between China and the U.S in January 2018, when President Trump began setting tariffs and other trade barriers on China. The Biden administration kept the tariffs in place and added additional levies on Chinese goods such as electric vehicles and solar panels. In his 2024 campaign President elect Trump proposed a 60% tariff on all Chinese goods. Trade tensions heated up between China and the U.S in January 2018, when President Trump began setting tariffs and other trade barriers on China. The Biden administration kept the tariffs in place and added additional levies on Chinese goods such as electric vehicles and solar panels. In his 2024 campaign President elect Trump proposed a 60% tariff on all Chinese goods.

The Biden administration is set to expand and finalize rules on Jan 14 that will ban nearly all Chinese cars and trucks—including EVs—from U.S. roads. Chinese cars with software and hardware that could pose a national security risk are the justification given for the wide scope of exclusions. The main focus of the new rules expand on the ban proposed in 2023 by the U.S. Commerce Department. Following the proposal, Biden ordered an investigation in February 2024 on security risks from Chinese tech, proposing a national security ban the following September on certain Chinese and Russian-made car parts set to start in 2027.  Along with the expanded exclusion of all Chinese autos entering the U.S. market, some software and chips are on the chopping block as well. 

GM's Envision may be affected by the ban.

"Cars today aren't just steel on wheels -- they're computers," said Commerce Secretary Gina Raimondo. "This is a targeted approach to ensure we keep PRC and Russian-manufactured technologies off American roads."

The ban is likely to affect domestic automakers that source hardware and software from China, at least in the short term. Ford and GM have vehicles that are built in China, like the Lincoln Nautilus and Buick Envision. In 2024, GM sold 47,340 Envisions, while Ford sold 36,544 Nautilus SUVs in the U.S. market that were built in China. 

Chinese Automaker Geely purchased Volvo in 2017.

International automakers like the Geely Auto Group will have to stop selling vehicles in the U.S. unless they gain specific authorizations from the Commerce Department to continue selling vehicles or components that involve Chinese-made technology.  The Geely Auto Group includes the Volvo Group, bought in 2010 from Ford and Lotus acquired in 2017 from Proton (which acquired it from GM). Geely Auto also has a stake in Polestar along with PSD investment and the Smart car, a joint venture with Daimler.  Volvo sold 125,243 cars in the U.S. market in 2024, Lotus 7,617 units, and Polestar 12,903 EV’s.  Volvo, Ford, GM and Geely are in discussions with the department of Commerce to mitigate potential risks.

Tesla's Model Y was the #1 EV sold across the globe in 2024. 

The heating up of the trade war with China has had a negative affect on U.S automakers' whose sales in the largest car market in the world have been on a steady decline over the past few years. GM's China sales fell 25% in the first quarter of 2023 alone, after retreating 20% in 2022.  Tesla is the only U.S auto company that did not lose ground in 2024 in the PRC, with the Model Y becoming the best selling car in China last year. U.S automakers have been focusing their EV sales on American buyers, the widened bans may create a costlier transition.  

The Biden Administration is leaving a potential showdown over EV issues for the in-coming Trump Administration, which includes Tesla's CEO Elon Musk.  Tesla competitors, Ford, GM, Volvo, and Polestar have been cutting into the EV makers U.S profits over the last few years. 

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Last modified on Tuesday, 14 January 2025 23:46