The US has introduced another measure, a Connected Vehicle Security Act, in an attempt to restrict Chinese automakers.

Now, the tables have turned, with American car companies being the first to seek exemptions. What is happening here?

Waving the 'National Security' Banner

According to reports, in late April, US Senators Bernie Moreno and Elissa Slotkin introduced the so-called "Connected Vehicle Security Act of 2026," which aims to prohibit the import, sale, and operation of vehicles manufactured in China or other "countries of concern," and bans the use of connected vehicle technology developed by China on US roads.

The bill proposes that software and vehicle restrictions take effect in 2027, with hardware restrictions following in 2030. This phased approach is intended to give the US industry time to secure domestic supply chains.

The legislation also stipulates that if a connected vehicle manufacturer has at least 15% of its equity held by entities from a US-designated "restricted country," that company will be prohibited from producing or selling cars in the United States.

For violations, the bill proposes an initial penalty of $1.5 million, or five times the value of the transaction. Continued non-compliance would lead to daily escalating fines.

On May 27th, two lawmakers, including Elissa Slotkin, introduced another bill to ban Chinese connected vehicles from entering the US, including through its neighbors Mexico and Canada.

This marks the fourth legislative proposal this year from bipartisan US lawmakers aimed at protecting national security and the domestic auto industry from perceived Chinese automotive threats.

Elissa Slotkin stated that the new bill builds upon her earlier bipartisan "Connected Vehicle Security Act of 2026," explicitly "prohibiting Chinese-made vehicles from entering the US in any way, even for a single day."

Slotkin quoted Oren Cass, chief economist at the think tank American Compass, who said, "The US needs an urgent decoupling from China to restore our economic sovereignty. Among all sectors, the automotive industry is particularly urgent."

In the US, a bill must pass identical versions in both the House and Senate and be signed by the President to become law.

Who is Actually Being Restricted?

It's important to clarify that the origin of these proposed "bans" is a new regulation on connected vehicles issued by the Biden administration in 2025, focusing on vehicle imports and market access for Chinese and Russian-made automotive software and hardware.

Behind these seemingly tough legislative proposals, who is actually being constrained?

Ford confirmed to Reuters that it has applied to the US Department of Commerce for authorization to continue importing its China-produced Lincoln Nautilus SUV. This model is one of the few Chinese-imported vehicles sold in the US before the government restrictions took effect.

Ford stated that the Nautilus software was developed in the US and installed on vehicles in China, thus requiring US government approval for continued sales in America.

From January to May 2026, Ford sold 15,044 Nautilus units in the US, making it the brand's best-selling model by a significant margin. During the same period, Lincoln Navigator sales were 8,458, Lincoln Aviator sales were 10,901, and Lincoln Corsair sales were 7,535.

Ford is likely to begin importing the 2027 model year Nautilus in January 2027, leaving only a few months to secure the necessary authorization.

The situation is somewhat ironic. US politicians are loudly proclaiming "national security" and busy building walls against the Chinese auto industry. Before the wall is even finished, American automakers are already perched on top of it, pleading to be let through.

Volvo Cars stated in May that it had received an exemption, but all its models sold in the US must still fully comply with regulatory details. The company confirmed that due to its ownership structure, specific authorization is required.

Other automakers that may need to apply for licenses include the premium electric vehicle brand Polestar, jointly created by Geely and Volvo. The company stated it is working with the US government to comply with the new rules.

Beyond sales impacts, once hardware controls are implemented, the entire supply chain for US automakers faces even more daunting challenges.

General Motors has set a deadline for some suppliers to remove Chinese components from their supply chains by 2027. Earlier this year, GM announced it would shift production of the Buick Envision to a plant in Kansas, USA, starting in 2028.

Data from the global consulting firm AlixPartners shows that Chinese companies hold stakes in approximately 5% of the roughly 10,000 US automotive suppliers, with over 60 US-headquartered suppliers controlled by Chinese firms. These suppliers include manufacturers of axles, airbags, windshields, and steering systems.

Researchers at Rhodium Group stated plainly in a study: "Hardware restrictions could be even more cumbersome, and automakers will need more time to adapt."

Reuters put it bluntly: this exposes how deeply intertwined the US auto industry's supply chain is with China.

The Global Supply Chain is Not a Private Garden

CNBC, citing Kelley Blue Book data, reported the average price of a new car in the US in April was $49,461. Meanwhile, according to the automotive information platform DCar, consumers in China can choose from over 200 battery-electric models, including hybrids, all priced below $25,000.

American consumers are facing heavy pressure from vehicle costs, while the US government takes a hardline stance against the Chinese automotive supply chain.

"The reality is, we are behind Chinese cars in the US market, but we hope automakers can innovate in response," Stephen Ezell, Vice President of the Information Technology and Innovation Foundation, told CNBC. "Ultimately, if the auto industry wants to thrive in the US, it must compete through innovation."

The Motor & Equipment Manufacturers Association (MEMA) has acknowledged: "Nearly all parts suppliers report that software and hardware are jointly developed by global teams. It remains unclear whether regulatory measures can precisely constrain individual lines of code."

Even the industry association is perplexed. If the mandate is to strip out Chinese technology, but the ownership of the technology itself is unclear, how can it be removed?

AlixPartners data shows that in 2012, only 1 Chinese company was among the global top 100 automotive suppliers. By 2024, this number had grown to 13, and is projected to reach 22 by 2030.

Growing from 1 to 22 companies in 18 years wasn't achieved through policy subsidies, but through solid manufacturing capability, cost control, and delivery efficiency.

The global automotive industry is already deeply interconnected. It cannot be severed by legislation. Forced "decoupling" will only lead to higher domestic production costs and significantly extended delivery timelines.