The Mexican government has expressed serious concerns regarding the Biden administration's proposal to ban critical Chinese software and hardware in connected vehicles on American roads, citing national security issues.

In a filing with the U.S. Commerce Department, Mexico's economy ministry warned that this proposal could significantly impact the country's automotive sector. It highlighted potential trade barriers, disruptions to supply chains, increased production costs, and a risk of reduced employment, both directly and indirectly.

Car and technology industry groups have also requested changes to the proposal and called for more time before the rule takes effect. This proposal represents a considerable escalation of U.S. restrictions on Chinese vehicles, software, and components, effectively banning the import of Chinese-brand vehicles, even if they are assembled in Mexico.

In September, the Biden administration had already imposed steep tariff increases on Chinese imports, which included a 100% duty on electric vehicles and hikes on EV batteries and essential minerals.

Mexico argued that the proposal could violate North American free trade rules, potentially leading to increased production costs due to a shift in suppliers for auto parts and components within the automotive industry’s planned supply chains.

The Commerce Department has not provided immediate comments on the matter. Under the proposed timeline, the software ban would take effect in the 2027 model year, while the hardware ban would start in the 2030 model year or January 2029.

The Alliance for Automotive Innovation, which represents major car manufacturers like General Motors, Toyota, Volkswagen, and Hyundai, has requested at least an additional year to comply with the hardware requirements. Similarly, the Consumer Technology Association and Honda Motor have called for both deadlines to be extended by two years to allow for essential testing, validation, and updates to contracts.

The Commerce Department aims to finalize the proposal by January 20, and the regulations will apply to all on-road vehicles, excluding agricultural or mining vehicles not utilized on public roads, as well as drones and trains.

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