Federal officials in Washington have quietly cut a deal with Volvo Car AB that lets the Swedish automaker keep selling its connected vehicles in the United States, U.S. officials said. The agreement is meant to address national-security concerns tied to software and connectivity that lawmakers and regulators have been flagging, while easing the bite of a policy that could have blocked cars, parts and certain software with links to China.
As reported by Bloomberg, the Trump administration negotiated with Volvo Car AB on a set of compliance measures that officials say reduce the "sufficient nexus" to the People’s Republic of China that would trigger Commerce Department enforcement. According to U.S. officials cited by Bloomberg, the arrangement lets Volvo keep operating in the U.S. while the government keeps an eye on how the company manages its vehicle connectivity systems.
What the rule covers
The Commerce Department's Bureau of Industry and Security finalized a rule in January 2025 that restricts the import or sale of connected vehicles and certain vehicle connectivity software and hardware when those pieces have a sufficient nexus to countries the U.S. labels foreign adversaries, especially China and Russia. The rule starts phasing in software prohibitions with model year 2027 and extends to hardware in later model years. It also gives BIS authority to issue authorizations and waivers. As outlined by the Bureau of Industry and Security, the measure is framed as a national-security safeguard, not a one-off Volvo fix.
How Volvo's structure and U.S. plant factor in
Volvo Car AB is majority-owned by Zhejiang Geely Holding Group, a corporate structure that complicated how the new rule would land on the brand, according to company filings and investor materials. Volvo Cars notes that Geely Sweden Holdings controls roughly 78.6% of the company.
The automaker also runs a U.S. assembly plant in Ridgeville, South Carolina, a footprint executives have said they could expand to lean less on overseas suppliers and software ties, as reported by Reuters. That domestic presence adds another wrinkle for regulators trying to balance national security concerns with jobs and investment on U.S. soil.
What officials say about the deal
U.S. officials told Bloomberg they hammered out technical and oversight steps, from declarations of conformity to audit access, that they believe resolve the most urgent national-security questions. They declined to spell out every term of the deal. Bloomberg reported that the carve-out is meant to be narrowly tailored and could be revisited as Commerce refines its enforcement guidance.
Lawmakers could still tighten rules
Even with the Volvo arrangement, lawmakers are pushing to lock in tougher statutory limits that could reach European brands with deep Chinese ties. E&E News reported that senators have introduced legislation that would bar automakers with significant Chinese controlling interests, a threshold that could snare Volvo and others. Those bills would write the model-year timelines into law and add penalties that could make future carve-outs a lot harder to secure.
What happens next hinges on how the Commerce Department puts this in writing and whether Congress decides to tighten or relax the guardrails. Automakers and dealers are waiting for formal letters and enforcement memos that spell out exactly where the red lines are. For now, the negotiated deal keeps Volvo in the U.S. market, but the shape of future enforcement is anything but settled.
