Asianfin--The U.S. Commerce Department is set to propose a ban on the use of Chinese software and hardware in connected and autonomous vehicles on American roads on Monday, citing national security concerns, Reuters reported, citing two unnamed sources. According to Reuters, the proposal is expected to be announced on Monday.

The Biden administration has raised serious concerns regarding the potential for Chinese companies to collect data on U.S. drivers and infrastructure, as well as the risk of foreign manipulation of connected vehicles. The proposed regulation would prohibit the import and sale of vehicles from China that incorporate key communications or automated driving system software or hardware.

According to the sources, the department intends to allow a 30-day public comment period before finalizing the rules. The proposal aims to make the software prohibitions effective starting in the 2027 model year, while hardware bans would be implemented in January 2029. The Commerce Department did not provide comments on the matter over the weekend.

The proposed regulation is part of a broader strategy by the Biden administration to address potential risks associated with data collection by Chinese companies on U.S. drivers and infrastructure. U.S. President Joe Biden emphasized the importance of safeguarding national security, saying “China's policies could flood our market with its vehicles, posing risks to our national security. I'm not going to let that happen on my watch.”

The ban will affect nearly all newer vehicles on U.S. roads, which are considered 'connected' due to their onboard network hardware that allows internet access. This includes vehicles with certain Bluetooth, satellite, and wireless features, as well as highly autonomous vehicles that can operate without a driver.

The reported ban follows Washington's recent implementation of a 100% tariff on Chinese electric vehicles (EVs), aimed at curbing the rapidly growing Chinese EV industry. This move coincides with an intensified campaign by U.S. officials against Chinese EVs and other products.

In May, Commerce Secretary Gina Raimondo even warned that vehicles equipped with Chinese software or hardware could be disabled. "You can imagine the most catastrophic outcome theoretically if you had a couple million cars on the road and the software were disabled," she said.

In response, Chinese Foreign Ministry spokesperson Mao Ning reiterated that such statements are not only false narratives but also indicative of the politicization of economic and trade issues.

Mao added that American automakers have long benefited from the lucrative Chinese market, while U.S. protectionist measures severely hinder Chinese automotive entry into the American market.

China remains a major supplier of components for electric and smart vehicles. Despite being the world's largest producer and seller of automobiles for 14 consecutive years, mainstream Chinese car manufacturers have minimal presence in the U.S. market.

According to the China Passenger Car Association, only 74,800 passenger vehicles were exported to the U.S. in 2023, accounting for just 1.4% of total exports; in breakdown, 18,600 were new energy vehicles, making up only 0.4%.

Bloomberg views the proposed ban as a means to prevent Chinese suppliers from establishing a more substantial foothold in the U.S., providing American automakers time to develop their own connected vehicle supply chains.