The United States could take a new step in its trade restrictions policy against China. Recently, the government announced heavy tariffs on Chinese EVs. Now, a new report claims that the United States will soon propose a ban on Chinese software and hardware for connected vehicles.
The connected and autonomous vehicles segment is booming in the Asian country. Chinese companies have been developing connected and autonomous EVs for a long time, a sector where even Xiaomi has ventured. However, the United States government is responding with protectionist policies on the local market.
Washington may soon propose a ban on Chinese hardware and software for connected vehicles
Recently, Washington announced a severe 100% tariff on Chinese electric vehicles. According to Reuters, the next step will be a proposal for a total ban on hardware and software used in connected vehicles. If it sounds familiar, it’s because the United States did the same thing years ago with Huawei’s telecommunications equipment. The United States Department of Commerce could announce the measure on Monday.
As with Huawei, the US Department of Commerce will give connected vehicle manufacturers a period to adjust to the new law. The software ban would come into effect in 2027, while the hardware ban would do so in 2030. So, companies will have to look for replacements for components from other suppliers outside China. As is normal, this could have an impact on an overall increase in costs.
Chinese EVs have not yet entered the US market. Even so, there are companies, local and international, that use hardware and software components of Chinese origin. Searching for a replacement could disrupt their medium and long-term plans. Indeed, a trade group comprising prominent brands like Toyota, Volkswagen, General Motors, and Hyundai cautioned about the challenges to overcome to locate replacements for all the targeted components.
Trade war impacting some big Chinese companies, but also American ones
The trade war has had a direct impact on more than just Huawei. TikTok is in the middle of a legal process that could lead to ByteDance, its parent company, divesting itself of its US division. In similar cases, Washington often uses the protection of national security as its main argument, although with TikTok it also added the protection of children. However, protectionist policies may also backfire on the US market.
Regarding the potential ban on software and hardware for connected vehicles, tech industry experts say that they may be too costly for companies operating in the US. Mobile carriers and internet providers also had to make huge investments to replace all Huawei equipment years ago. In the end, the measures may not achieve the desired effect for the US, as Chinese industry has sought ways to continue developing amid the tense environment. In related news, Google is working on a Gemini-powered Android Auto for an advanced navigation experience.
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