Key Takeaways:
A bipartisan Senate bill targeting Chinese-linked auto technology could force Mercedes-Benz out of the U.S. market.
The Senate Commerce Committee advanced bipartisan legislation Tuesday that would bar automakers with at least 15% Chinese ownership from selling vehicles in the U.S., a threshold Sen. Ted Cruz warned could ensnare Mercedes-Benz Group AG.
"Mercedes-Benz's ownership structure illustrates how broadly this bill could sweep," said William Reinsch, senior adviser at the Center for Strategic and International Studies and a former Commerce Department official. "A 15% threshold captures many global automakers with Chinese investment ties."
The legislation targets Chinese-connected vehicle hardware and software, building on a 2024 Commerce Department rule that effectively banned Chinese connected-car technology. The bill's 15% ownership trigger goes further by targeting corporate ownership structures. Mercedes-Benz's two largest individual shareholders — both Chinese — collectively own about 20% of the German automaker, according to public filings. The company sold more than 350,000 vehicles in the U.S. last year.
If enacted, the bill could disrupt a U.S. auto market where foreign automakers with Chinese ownership ties generate tens of billions in annual revenue. The legislation sets a precedent for the broadest decoupling of U.S.-China auto supply chains to date, potentially affecting automakers from BMW to Volkswagen that have varying degrees of Chinese investment exposure.
The Commerce Committee's action follows a broader push by lawmakers from both parties to restrict Chinese influence in the U.S. automotive sector, citing national security concerns over data collection and remote vehicle access. The current average U.S. tariff on Chinese-made vehicles stands at 27.5%, after the Biden administration quadrupled tariffs on Chinese EVs to 100% in May 2024. That escalation reduced Chinese EV imports to near zero, according to Census Bureau data.
The bill's ownership threshold represents a significant escalation from existing restrictions. The 2024 Commerce Department rule targeted connected-car software and hardware from Chinese and Russian manufacturers but did not address corporate ownership structures. The new legislation would apply the 15% threshold to any automaker selling vehicles in the U.S., regardless of where its cars are manufactured.
For Mercedes-Benz, the stakes are particularly high. The Stuttgart-based automaker's two largest individual shareholders are Chinese entities — Beijing Automotive Group and a Chinese investment fund — that together hold nearly 20% of the company's shares. If the bill becomes law, Mercedes-Benz would need to either restructure its ownership, seek a waiver, or exit the U.S. market entirely. The last time the U.S. imposed ownership-based restrictions on foreign automakers was in the 1980s, when voluntary export restraints capped Japanese auto shipments.
The bill now heads to the full Senate for consideration, though its timeline remains uncertain. Similar legislation in the House has not yet advanced out of committee. Industry groups representing foreign automakers have signaled they will lobby aggressively against the ownership threshold, arguing it would disrupt supply chains and raise vehicle prices for American consumers. The American International Automobile Dealers Association estimates that foreign-brand automakers account for roughly half of all U.S. vehicle sales, representing more than 7 million units annually.
This article is for informational purposes only and does not constitute investment advice.
