U.S. Congress is reviewing targeted legislation that would prohibit automakers with over 15% ownership by foreign adversary governments from producing, selling, or importing vehicles in America. Mercedes-Benz could be forced to exit the U.S. market due to BAIC and Geely stakes. If enacted, this would mark a new phase in global automotive trade protectionism and further accelerate Chinese companies' deep cultivation of alternative markets in Central Asia and Russia.
Core Provisions and Scope of Impact
The draft stipulates that any enterprise with over 15% ownership by a foreign adversary government or related entities would be banned from manufacturing, selling, delivering, or importing vehicles in the U.S. China is listed as an adversary nation. Under this standard, Mercedes-Benz could become the first traditional luxury brand affected — BAIC Group holds 9.98%, Geely founder Li Shufu holds 9.69%, and combined Chinese-affiliated ownership reaches 19.67%.
If passed, the bill would trigger cascading effects:
- Direct impact on international automakers with Chinese shareholding
- Leave policy room for subsequent expanded restrictions
- Reshape capital structure expectations across the global auto industry
Characteristics of potentially affected enterprises include:
- Chinese shareholder ownership exceeding the 15% threshold
- Association with the Chinese government or state-owned enterprises
- Production, sales, or import operations within the United States
Japanese and Korean Carmakers Already Suffering Tariff Blowback
While high tariff walls aim to block Chinese automakers, allies have paid a heavy price. In FY2025, Toyota's operating and net profits both fell about 20%, with the North American market posting a rare operating loss. The impact of U.S. tariffs on Toyota's operating profit reached ¥1.38 trillion.
Hyundai's situation is equally concerning:
- Q1 revenue hit a record for the period
- But operating and net profits declined sharply
- North American operations under clear pressure
| Automaker | FY2025 Profit Change | North America Impact | Tariff Loss |
|---|---|---|---|
| Toyota | Operating profit -20% | Rare operating loss | ¥1.38 trillion |
| Hyundai | Record revenue | Sharp profit decline | Significant |
| Chinese OEMs | Directly blocked | Market access restricted | High barriers |
American EV Market in Reverse
A closed market has also backfired against domestic brands. In Q1, U.S. pure EV sales reached only 216,000 units, down 5.7% year-over-year, with penetration falling to 5.8% — far below the 10.6% peak in Q3 2025.
Under excessive protection, U.S. automakers are cutting EV investments and losing electrification momentum. This data forms a stark contrast with China's NEV penetration exceeding 47% during the same period, exposing the long-term damage of trade protection to industrial competitiveness. EX1000.COM continues tracking global automotive trade policy changes, providing timely policy analysis and market insights for dealers and consumers in Central Asia and Russia.
Global Restructuring and Chinese OEM Response
From vehicle market closure to supply chain localization demands, the U.S. is moving further down the path of isolating itself. However, under high domestic vehicle prices, many American consumers are turning to cross-border purchases, exposing the false benefits of trade protection.
For Chinese auto exporters, while the U.S. market was already high-barrier, this move will further solidify a de-Americanized global layout:
- Accelerate deep cultivation of alternative markets in Central Asia and Russia
- Strengthen market share in Southeast Asia and Latin America
- Drive regional integration of technical standards and supply chains
| Alternative Market | Advantages | Chinese OEM Deployment Depth |
|---|---|---|
| Central Asia | Geographic proximity, friendly policies | Leading |
| Russia | Strong demand, high brand recognition | Leading |
| Southeast Asia | Large growth potential, tariff preferences | Actively expanding |
| Latin America | Substantial market size | Rapid growth |
