Bill targeting China could shut Mercedes-Benz out of US auto market

New bipartisan legislation introduced in Congress is creating unexpected ripples for Mercedes-Benz. While the proposed measure aims to curb the influence of foreign adversaries like China, Russia, and North Korea, its current language could inadvertently block the German automaker from the American market.

The Motor Vehicle Modernization Act

As reported by CNBC, the Motor Vehicle Modernization Act of 2026 seeks to prohibit any automaker with “direct or indirect equity interest by a foreign-adversary government” from manufacturing, importing, or selling vehicles within the United States.

The core issue for Mercedes-Benz lies in its ownership structure. The company’s largest individual shareholder is the state-owned Chinese automaker BAIC, which holds a 9.98% stake. When combined with the 9.69% stake held by Chinese billionaire Li Shufu, foreign investors with significant ties to the region control roughly 19.6% of the Mercedes-Benz Group AG parent company.

Potential Impact on Operations

If enacted, the bill would impose a five-year ban on companies meeting these criteria. For Alabama, the stakes are substantial. The automaker’s Vance plant employs approximately 5,800 people and currently exports nearly 60 percent of its production. Additionally, the company has maintained a strong presence in South Carolina, producing over 450,000 passenger vans at its Ladson facility since 2006.

The legislative pressure arrives at a time when Mercedes-Benz is doubling down on its domestic footprint. The company recently announced plans to invest another $4 billion in its Tuscaloosa County plant over the next four years. Furthermore, the firm has set an ambitious target to sell 400,000 units annually in the U.S. by 2030.

Industry Context

The legislation, sponsored by House Energy and Commerce Committee Chairman Brett Guthrie, comes amid rising concerns regarding how quickly Chinese competitors are moving from design to mass production. The urgency is echoed throughout the sector; Toyota CEO Koji Sato recently noted that “unless things change, we will not survive.”

While the bill currently lacks a companion in the Senate, its language remains strict. Although some exemptions exist for long-standing U.S. manufacturers, those exceptions explicitly exclude any entity with an equity interest held by a foreign-adversary government. A spokesperson for Mercedes-Benz declined to comment on the proposal to CNBC.