Biden administration’s move to slap a 100% tariff on Chinese electric vehicles coupled with a ban on foreign tech in U.S. vehicles raises national security to the forefront.
At a Glance
- 100% tariff on Chinese electric vehicles imposed.
- Prohibition on Chinese and Russian software and hardware in U.S. internet-connected cars.
- National security threats cited as principal rationale.
- Ban on hardware starts 2030; software starts 2027.
Sweeping Tariffs and Bans Announced
The Biden administration has escalated its efforts to counter Chinese dominance in the U.S. auto market. New tariffs set at 100% virtually block Chinese electric vehicles (EVs) from entering America. The Department of Commerce also plans to ban Chinese and Russian software and hardware in U.S.-made internet-connected cars. The phased approach will see a hardware ban effective in 2030, and a software ban starting from the 2027 model year.
The sweeping change comes amid revelations of Chinese subterfuge and its implications on national cybersecurity. National Security Adviser Jake Sullivan emphasized the urgency: “We’ve already seen ample evidence of [China] pre-positioning malware on critical infrastructure for the purpose of disruption and sabotage.”
The Biden administration is proposing a rule to block the sale and import of Chinese- and Russian-made hardware and software for connected vehicles https://t.co/XwCuQefZOw
— Bloomberg (@business) September 23, 2024
National Security Concerns at the Core
The White House cited substantial cybersecurity threats from foreign adversaries, including possible surveillance and remote access. As highlighted by Gina Raimondo, Secretary of Commerce, “We’ll secure our cars and we’ll secure the American people, including our children, from potential surveillance, remote access and control, and protecting Americans from bad actors and trying to give every American peace of mind.” Vehicular components covering Bluetooth, Wi-Fi, cellular, and satellite modules, as well as integral driverless technologies, will fall under the new prohibitions.
This regulatory thrust comes in response to a thorough Commerce Department investigation. The investigation uncovered that connected vehicle software from hostile nations could pose risks, urging stringent measures. FBI Director Christopher Wray echoed these concerns to Congress, stressing China’s targeted efforts on American infrastructure.
Impact on American Manufacturers
Manufacturers like GM, Ford, and Volvo, which currently build cars in Chinese factories, will feel the shockwaves of this ban. Compliance deadlines mean American automakers must expunge Chinese-made software and hardware components from their vehicles by 2027 and 2030, respectively. This aims to bolster national security by mitigating the risks from potential vulnerabilities embedded in foreign technology.
One of the further-reaching implications concerns the EV production and supply chain. American lawmakers and auto executives like those at the Autonomous Vehicle Industry Association support the administration’s position. By introducing a 100% tariff, the administration intends to insulate domestic manufacturers from the surge of budget-priced Chinese EVs such as the BYD Seagull, preventing them from destabilizing U.S. makers.
Following the Footsteps of Federal EV Tax Credits
The Biden administration’s move could sync with existing federal EV tax credits that exclude vehicles with any Chinese-made battery components. The Commerce Department has proposed a month-long public comment period before the rule is set in stone. This aligns with Lael Brainard’s, Biden’s national economic adviser, belief in the rule’s potential benefits for American workers.
Meanwhile, European markets have set a cautionary example by failing to impose similar restrictions, leading to an influx of nearly half a million Chinese-made cars. Commerce Secretary Raimondo indicated that the U.S. must avoid a similar fate, ensuring that the American market remains secure and resilient against foreign economic and technological incursions.
Raimondo emphasized the essential nature of this ban stating, “This is not about trade or economic advantage. This is a strictly national security action.” The critical focus remains on protecting American infrastructure and the critical role of national security in shaping policy decisions. With the final rule expected before the end of Biden’s term, the U.S. government sends a clear, unambiguous message about its stance on foreign technological influence in the automotive sector.
