China-made EVs have been appearing on California and Texas roads — legally — under a US customs provision that allows non-US residents to drive their own foreign-registered vehicles across the border for temporary personal use.
The rule has been in place for decades and applies to non-US residents bringing personally owned vehicles into the country for limited stays. Vehicles entered under the provision do not have to meet US safety or emissions standards, but cannot be sold, leased, or registered in the United States.
A BYD dealership in Tijuana’s Zona RÃo confirmed to the New York Post that vehicles are being purchased by Mexican residents and driven into San Diego, with buyers required to hold Mexican residency or a Mexican driver’s license.
The Wall Street Journal reported that a Mexican resident in Ciudad Juárez bought a BYD Song Pro plug-in hybrid for around $31,500 and drives it across the border multiple times a week to attend flight school in Texas.
Users on Reddit have been posting sightings of BYD vehicles with Mexican license plates on the r/spotted subreddit, with several reports of the BYD Shark pickup truck in Texas and the BYD Song Pro elsewhere.
How it Works
At the US-Mexico border, the driver must present Mexican residency documentation, a Mexican driver’s license, vehicle registration, and proof of ownership.
US Customs and Border Protection processes it as a non-resident personal vehicle entry.
The vehicles cannot be registered in the United States or sold domestically.
A full compliance process would be required — one that is either prohibitively expensive or impossible for most Chinese models. But under temporary entry rules, compliance is not required.
Tariffs and Tech Ban
According to a Kelley Blue Book study published earlier this year, 38% of Americans say they would consider buying a Chinese vehicle if they had the choice.
The US has built a two-layered system to keep Chinese automakers out, with the first one being tariffs.
President Joe Biden quadrupled the Section 301 tariff on Chinese EVs to 100% in May 2024, which Trump maintained after returning to the White House in January 2025.
Last year, the US President also imposed a 25% Section 232 national security tariff on all imported vehicles and auto parts. The combined duty on a Chinese EV now exceeds 125%.
“I put 100% tariff on all Chinese cars coming in, and that’s destroying Europe,” Trump said in a Fox News interview late last year. “They’re destroying Europe because they’re taking away so much business from Mercedes and BMW.”
According to the President, having Chinese vehicles in the US would have “destroyed” Detroit automakers General Motors and Ford.
He called the Biden tariff “about the only thing” his predecessor “did good.”
The second layer is a connected vehicle ban finalized by the Commerce Department in the first month of office.
The rule prohibits vehicles containing Chinese- or Russian-linked software and hardware in their connectivity and automated driving systems from being imported or sold in the US.
The rule means that even if a Chinese automaker built a factory on US soil — an option Trump has publicly endorsed — the finished vehicles could not contain Chinese-developed software or hardware in their connected or autonomous systems.
US Trade Representative Jamieson Greer confirmed earlier this month that the administration has no plans to alter the ban.
“Those rules are effective,” Greer stated. “It seems like it would probably be difficult for certain countries to establish new production here, given those sets of rules.”
Bipartisan Pushback
At the same time, congressional pressure has been building on both sides of the aisle.
More than 70 House Democrats led by Representatives Debbie Dingell and Ro Khanna called on Trump this week not to permit Chinese automakers to build or sell vehicles in the United States.
The letter follows a similar effort earlier this month by three Democratic senators — Tammy Baldwin, Elissa Slotkin and Chuck Schumer — who warned that allowing Chinese automakers in would create an economic advantage that American manufacturers could not overcome.
On the Republican side, Senator Bernie Moreno has proposed legislation for a permanent ban.
Five major auto trade groups — representing General Motors, Ford, Toyota, Volkswagen, Hyundai and others — wrote to the White House calling China a “clear and present threat” and urging the administration to block Chinese government-backed automakers and battery manufacturers from opening plants in the country.
Chinese EVs in Mexico
While the US has kept Chinese automakers out, BYD has become the dominant EV brand in Mexico.
The Shenzhen-based company accounted for roughly 70% of Mexico’s EV and plug-in hybrid sales in 2025, according to Bloomberg.
It nearly doubled its Mexican sales volume last year and has established more than 80 dealership locations across the country.
Mexico became BYD’s largest overseas export destination in the first eleven months of 2025, with over 116,000 vehicles shipped there, according to industry data compiled by Gasgoo.
BYD’s Dolphin Mini — its best-selling model in Mexico — is priced about $2,000 below its closest competitor.
Chinese brands account for roughly a quarter of all vehicle sales in the country.
Some Chinese vehicles start around $20,000 in Mexico, while the average American transaction price approaches $50,000.
SAIC‘s MG, JAC, Chery, and Great Wall Motor are all currently present in Mexico.
XPeng joined the list earlier this year, with the North American country marking its 60th global market.
Mexico more than doubled auto import tariffs on Chinese vehicles to 50% in September 2025, partly under US pressure.
A further round of tariffs on imports from non-free-trade-agreement countries took effect on January 1. However, the price gap has held.
Several automakers’ representatives have criticized Chinese competition for these subsidies, including Ford Motor Co.’s Jim Farley and Rivian’s founder and CEO RJ Scaringe.
Despite praising the Chinese companies’ tech, they flag lower labor costs and heavy government subsidies as unfair competition.
BYD received 12.5 billion yuan ($1.7 billion) in Chinese government subsidies in 2025, representing over 31% of pretax profit, according to the company’s annual filing with Hong Kong and Shenzhen stock exchanges.
Canada’s Approach
Canada has moved in the opposite direction.
Prime Minister Mark Carney signed a deal with Beijing in January allowing up to 49,000 Chinese-built EVs into the country annually at a 6.1% tariff rate.
The arrangement replaced the 100% surtax Ottawa had imposed in late 2024.
The first tranche of 24,500 import permits covers March 1 through August 31, with the annual cap set to rise to 70,000 by 2030.
In exchange, China agreed to lower retaliatory tariffs on Canadian canola seed and remove anti-discrimination tariffs on Canadian lobster, crab and peas through at least the end of 2026.
BYD, Chery and Geely are all preparing for Canadian market entry by year-end.
US on Canada Deal
Trump initially said Carney “had to make” the deal. He then reversed course.
“China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life,” Trump wrote on social media.
Greer called the agreement “problematic” and warned Ottawa may regret it “in the long run.”
Ontario Premier Doug Ford called Chinese EVs “subsidized spy cars.”
Conservative leader Pierre Poilievre has pledged to scrap the quota and ban Chinese-linked vehicle software to align with US cybersecurity rules — however, the party’s counter-auto pact has been rejected in the House of Commons.
More than half of Canadians surveyed said a vehicle’s Chinese origin would not affect their buying decision, according to Nanos Research Group polling for Bloomberg.
For American consumers, the Canadian route is harder than the Mexican one.
Federal regulations require imported vehicles to go through full compliance with US safety standards.
The well-established daily commuting pattern at San Ysidro — where Mexican residents cross into San Diego for work and school — does not exist at the same scale on the northern border.
USMCA Review
Both the Mexican loophole and the Canadian trade deal are playing out ahead of the USMCA renegotiation, which faces a July 1 deadline for its joint review.
Mexican President Claudia Sheinbaum has flagged the elimination of auto tariffs as Mexico’s top priority.
Formal US-Mexico negotiations opened in Washington in March, as Canada was not at the table.
Canada’s expectations for a full renewal are “very low,” according to the New York Times, citing officials involved in trade discussions.
Trump has called the agreement “irrelevant” to the United States, saying that “there’s no real advantage to it. Canada would love it. Canada wants it. They need it.”
Greer told CBC that the US does not want either neighbor serving as a conduit for Chinese vehicles.
“We don’t want a situation where Canada’s being used as a back door for Chinese goods,” he said.
The Trade Representative recently told Congress he was not prepared to recommend renewal of the USMCA to the President without changes.
Trade talks between Ottawa and Washington were suspended in October after Trump terminated negotiations over an anti-tariff advertisement run by the Ontario government during the World Series, according to CBC News.
They resumed for the first time on March 7.
Mexico and Canada have been building their own bilateral track, with Economy Minister Marcelo Ebrard and Canada’s Trade Minister Dominic LeBlanc launching a joint economic action plan during the largest Canadian trade mission to Mexico on record.
