Congress Could Ban Mercedes from America Over Chinese Ownership Stakes

Mercedes-Benz is facing a genuine existential threat in the American market—not from competitors, but from Congress. A new bill winding through the House could ban the German automaker from building or selling cars in the U.S. altogether, and the reason is hilariously byzantine: Chinese investors own pieces of the company.

The culprit is the Motor Vehicle Modernization Act of 2026, a transportation funding bill with a deceptively simple anti-China amendment. The law would prohibit any automaker that’s at least 15% owned by countries the U.S. considers adversarial (China, Russia, North Korea) from manufacturing or selling vehicles domestically. On paper, it sounds reasonable—keep hostile foreign governments out of American automotive supply chains. In practice, it’s a legislative hand grenade.

The Math That Breaks Mercedes

Here’s where it gets messy. State-owned Chinese automaker BAIC holds 9.98% of Mercedes, while Li Shu Fu, billionaire founder of Chinese automaker Geely, controls 9.69%. Together, that’s 19.67%—well above the 15% threshold. According to reporting from CNBC, multiple sources familiar with the legislation believe the bill as written would ban Mercedes entirely.

The nightmare scenario is real. Mercedes has been manufacturing in Alabama since the 1990s—the Tuscaloosa plant alone pumps out hundreds of thousands of vehicles annually. Thousands of American jobs depend on Mercedes’ continued U.S. operations. A sales ban wouldn’t just hurt the German company; it would ripple through suppliers, dealers, and communities across the country.

The Loophole That Might Not Actually Be a Loophole

There is technically an exemption in the bill. Automakers with U.S. manufacturing operations for at least the last five years can sidestep the ban—except if they have “any direct or indirect equity interest by a foreign adversary government.” That carve-out effectively doesn’t exist for Mercedes, because the Chinese stakes are real and documented. It’s like saying you’re exempt from a speed limit as long as you never drive—the exception defeats its own purpose.

Mercedes CEO Ola Källenius sounded confident in May, telling media that he was “very confident that we will be able to handle that situation,” but that’s probably diplomatic optimism. A Mercedes-Benz spokesperson subsequently told Automotive News the company is “in close talks with legislators and policymakers” to find a solution. Translation: they’re panicking behind closed doors.

This Isn’t Just About Mercedes

Mercedes isn’t alone in the crosshairs. Volvo—also partially owned by Geely—faces the same jeopardy. Lotus and Polestar, both wholly owned by Geely, could theoretically be banned entirely. The bill casts a wide net, and the collateral damage extends far beyond luxury brands.

The legislative intent makes sense: Congress wants to prevent Chinese government-backed automakers from infiltrating American roads and potentially embedding surveillance or security vulnerabilities into vehicles. Senator Elissa Slotkin and others have pushed hard on Connected Vehicle Security, citing legitimate concerns about intellectual property theft and unfair subsidies. That’s fair game.

But here’s the problem with the current language: it doesn’t distinguish between strategic Chinese government ownership versus passive financial holdings. BAIC and Geely aren’t directly controlling Mercedes’ operations or its software. They’re shareholders—important ones, but shareholders nonetheless. The bill treats any Chinese equity like a Trojan horse, regardless of voting power or operational control.

The Absurdity We’re Living In

Let’s be real about the irony. Congress is drafting legislation to ban Chinese influence on cars while most Americans are reading this on Chinese-manufactured phones and the bill was written on Chinese-made computers. The geopolitical anxiety is valid, but the execution is theatrical.

What probably happens: Mercedes lobbies hard, Congress realizes the bill is broken, and an exemption or revision gets inserted before passage. Killing a 150-year-old luxury brand and tens of thousands of jobs over minority ownership stakes would be politically suicidal, even in today’s anti-China climate. Expect some last-minute tinkering that either raises the threshold, clarifies “government control” versus passive investment, or carves out major manufacturers with established U.S. operations.

But until that happens, Mercedes exists in legislative purgatory. The Motor Vehicle Modernization Act still has to pass the Senate, and it will almost certainly change along the way. The fact that we’re even having this conversation—that a company employing thousands of Americans could theoretically be banned from its largest market because of Chinese shareholders—reveals how blunt our policy tools have become. We’re swinging sledgehammers at scalpel problems, and German automakers are paying the price.

Sources: Jalopnik · Road & Track