President Biden took steps Thursday to block Chinese electric vehicles from entering the U.S. auto market, saying Internet-connected cars and trucks from China pose national security risks because their operating systems could send sensitive information. in Beijing.
The immediate action was to launch a Commerce Department investigation into security threats, which could lead to new regulations or restrictions on Chinese vehicles.
But administration officials made it clear that it was the first step in what could be a wide range of policy responses to stop low-cost Chinese electric vehicles — whether made in China or assembled by Chinese companies in countries like Mexico — from flood the US market and potentially crowd out domestic automakers.
China has rapidly ramped up its production of electric vehicles in recent years, putting it on a collision course with Mr. Biden’s industrial policy efforts that seek to help American automakers dominate that market at home and abroad. Some of its smaller cars sell for less than $11,000 each — significantly less than a comparable American-made electric vehicle.
The administration’s actions on Thursday come as Mr. Biden’s likely opponent in November, former President Donald J. Trump, criticizing him for pushing automakers toward electric vehicles — and as each candidate tries to appear tougher on China.
The measures came out of talks with Detroit automakers, auto worker unions and EV giant Tesla, which was recently replaced by China’s BYD as the world’s biggest seller of electric cars.
“China is determined to dominate the future of the auto market, including through the use of unfair practices,” Mr. Biden said in a statement accompanying the announcement. “China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch.”
Thursday’s action did not immediately impose new barriers on Chinese electric vehicles, which already face high tariffs and have yet to penetrate the growing U.S. market for clean-energy cars.
At Mr. Biden’s direction, the Commerce Department has launched an investigation into the threat posed by technology embedded in Chinese electric vehicles. That includes Chinese versions of car software that administration officials said could track where Americans were driving and charging their vehicles, or even what music or podcasts they were listening to on the road.
Administration officials noted that American automakers that sold vehicles to customers in China were effectively forced by Chinese officials to use Chinese software in their vehicles.
The announcement was the latest example of Mr. Biden’s move to tighten technology restrictions on China and continued a bipartisan trend toward more competitive trade relations between the world’s largest economies. The Commerce Department probe ordered by Mr. Biden marks the first use of a new authority established under an executive order issued in 2019 by Mr. Trump.
Biden officials said the investigation could lead to new U.S. restrictions on vehicles that depend on software from China.
Administration officials are considering other steps to further curb imports of Chinese vehicles, which have already surged in European markets as a result of low prices due in part to significantly lower labor costs. This could include raising tariffs of 25 percent on Chinese vehicles.
“We’re certainly going to continue to look at a number of policies to make sure that our automakers and our automakers continue to be the most competitive in the world,” Lael Brainard, head of the president’s National Economic Council, said in an interview.
The Treasury Department has already proposed rules aimed at limiting China’s ability to supply materials for cars and trucks that qualify for a $7,500 tax credit for electric vehicles included in Mr. Biden’s signature climate bill.
The Commerce Department investigation announced Thursday stemmed from a series of talks administration officials had with automakers last fall, following the settlement of a United Automobile Workers strike during which Mr. Biden sided with the union and joined a picket line. Automakers told administration officials about the restrictions they faced in selling to China, including in software.
Biden aides have begun to worry about what might happen if the United States doesn’t impose similar restrictions on Chinese software, which administration officials say only a few cars in America use today.
China is “flooding foreign markets with its cars,” Ms. Brainard said. “Many of these vehicles can be connected on a continuous basis to our infrastructure potentially, to drivers’ smartphones, to nearby cars. That’s how they collect a huge amount of information.”
In a briefing call with reporters, Gina M. Raimondo, the Commerce Secretary, said it was “scary to think about the cyber risks, the espionage risks, that these pose.”
Ms. Brainard emphasized that Thursday’s action was limited to software issues. But he added, “It’s also very important to our economic security and our national security to have a strong and vibrant U.S. auto industry, with U.S. auto workers.”
