German luxury carmaker Mercedes-Benz could face a potential ban from selling or manufacturing vehicles in the United States if a newly proposed bipartisan bill in the US Congress is passed in its current form. The proposed legislation, titled the Motor Vehicle Modernization Act of 2026, seeks to restrict automobile companies that have direct or indirect ownership links with governments classified by the US as “foreign adversaries,” including China, Russia and North Korea.
The proposed law has sparked concern within the global automobile industry because of its wide-ranging implications for international automakers operating in the US market. According to reports, the legislation could unintentionally affect Mercedes-Benz due to the ownership pattern of the company. Chinese state-owned automaker BAIC currently holds nearly a 10 per cent stake in Mercedes-Benz Group AG, while Chinese billionaire Li Shufu, founder of Geely, owns another major share through his investment company. Together, the Chinese-linked holdings amount to nearly 20 per cent of the German company’s equity.
Under the proposed bill, companies with substantial ownership ties to foreign-adversary governments may be barred from importing, manufacturing or selling vehicles in the United States for five years. Although the legislation includes exemptions for automakers that have maintained vehicle production operations in the US for several years, experts suggest those protections may not apply to firms with state-linked foreign ownership.
The development comes amid increasing concerns in Washington over China’s growing influence in the global automobile sector, especially in connected vehicle technology and electric vehicles. US lawmakers from both Republican and Democratic parties have intensified efforts to reduce Chinese involvement in critical industries, citing national security concerns.
Mercedes-Benz currently has a strong manufacturing presence in the United States. The company’s Tuscaloosa facility in Alabama has been operational since the 1990s and has produced millions of vehicles over the years. It also operates a manufacturing plant in South Carolina focused on passenger vans. Industry observers warn that any restriction on Mercedes-Benz could impact jobs, investments and supply chains tied to the company’s American operations.
Experts have also cautioned that the wording of the proposed legislation could affect several other global automakers with Chinese-linked investments, including Volvo, Lotus, Karma Automotive and Faraday Future. Analysts believe the bill highlights the complexity of separating the US automobile market from Chinese financial and technological influence, given the interconnected nature of the global auto industry.
The bill is still in its early stages and has not yet been passed by Congress. It is expected to undergo revisions before any final vote takes place in the House and Senate. Mercedes-Benz has reportedly started discussions with US lawmakers and officials in an attempt to ensure that the legislation does not negatively affect the company’s operations in the country.
The proposed move reflects the broader geopolitical tensions between the United States and China, with the automotive industry emerging as one of the latest sectors caught in the ongoing strategic and economic rivalry between the two nations.
