Eyeing a Chinese EV? You may not be able to drive into the U.S. if bill passes

Proposed legislation in the United States could mean some Canadians have to leave their cars at home if those automobiles are Chinese electric vehicles.

Last week, two Democratic lawmakers in Michigan announced the Protecting America from Chinese Cars Act, which would prevent Chinese vehicles from entering the U.S.

Michigan Congresswoman Haley Stevens and U.S. Senator Elissa Slotkin said the Chinese auto industry is “heavily subsidized by the Chinese Communist Party,” which allows them to “undercut competitors and quickly flood new markets.”

“This is an economic security issue and a national security issue, and we must prevent these vehicles from driving over our border and into our communities,” Slotkin said.

The two lawmakers pointed to Mexico, where Chinese cars have garnered 15 per cent of the market share, as an example of the growing influence of Chinese automakers. But they also referenced a trade deal signed between Canada and China during Prime Minister Mark Carney’s visit to Beijing in January.

In January, Canada agreed to allow up to 49,000 Chinese electric vehicles into Canada at a “most favoured nation tariff rate” of 6.1 per cent. In return, Ottawa expects Beijing to drop canola seed duties to 15 per cent from 84 per cent by March 1.

“The threat of connected vehicles from China is now at both of our backyards, to the North and South,” the statement from the two Michigan lawmakers reads.

Connected vehicles are vehicles that can share information with other devices or systems  such as other cars or smart phones.

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The proposed legislation raises national security concerns about allowing Chinese cars into the U.S.

“They’re surveillance packages on wheels – fully capable of geolocating individual drivers, collecting full-motion video, and mapping sensitive infrastructure sites, including our military,” Slotkin said.

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The U.S. market is already flooded with Chinese goods, with everything from cellphones and wearable tech to software, said Opher Baron, professor at the University of Toronto’s Rotman School of Management.

“This is a purely populist act,” Baron said.

While the U.S. banned Chinese software in American-made cars in February, many North American vehicles already have Chinese code, he added.

“It is easy to control physical flow (of cars) but I think there is a potentially much higher risk in the software. Even the cars that we drive today have a lot of autonomous components in them and a lot software in them,” Baron said.

The proposal comes ahead of the U.S. midterm elections and in the run up to the renegotiation of the Canada-U.S.-Mexico Free Trade Agreement, also known as CUSMA.

For Michigan, auto manufacturing is a sensitive electoral subject, Baron said.

“The guys who work in Michigan (in the auto sector), don’t want Chinese cars here,” he said.

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The bill seeks to prohibit “connected vehicles from China and other adversarial nations from entering the United States.”

“This includes connected vehicles manufactured or designed in China, as well as vehicles manufactured by a Chinese company or an entity in which Chinese companies have a greater than 15% stake,” the proposed legislation says.

That means the bill, if passed, wouldn’t just prohibit backdoor imports from Canada or Mexico, but also stop anyone from driving down to the U.S.

“It’s very aggressive,” Baron said.

The bill “bans fully finished Chinese vehicles from driving over in any capacity, even just for the day,” Slotkin said.

The proposed law also asks U.S. Customs and Border Protection to make rules around these prohibitions and create a list of prohibited vehicles.

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The bill is still proposed legislation and has a long road before it might potentially become law.

It will now be put before a committee, where it will be put to debate. It will then have to be put to a debate and a vote in both houses of the United States Congress.

If the bill passes both houses, it will be sent to U.S. President Donald Trump for consideration. If he chooses to sign the bill, it becomes law.

Trump has issued mixed signals on his views on Canada’s trade deal with China. Shortly after Carney’s visit, Trump called the deal a “good thing.”

“That’s what he should be doing. It’s a good thing for him to sign a trade deal. If you can get a deal with China, you should do that,” Trump said.

A few days later, however, he threatened Canada with more tariffs. Trump said any move by Ottawa to facilitate Chinese access to U.S. markets would be met with a 100 per cent tariff on all Canadian goods entering the United States.

In a post on his Truth Social platform, Trump rejected the idea that Canada could serve as what he called a “drop off port” for Chinese exports destined for the U.S. market.