Parading BYD and CATL at a State Dinner Forces Washington to Engage the Exact Firms It Has Flagged as Security Risks

Washington and Beijing are currently finalizing a high-stakes roster of prominent Chinese business leaders to accompany President Xi Jinping during his official state visit to Washington on September 24. According to diplomatic sources speaking to Reuters, the prospective delegation features some of China’s most dominant technology and automotive giants, including electric vehicle pioneer BYD, consumer electronics and EV manufacturer Xiaomi, and major battery producers CATL and Gotion. Final invitations are expected to be issued within days, pending a critical weekend meeting between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng.

The prospective composition of this business delegation has ignited intense debate across Capitol Hill and within national security circles. The inclusion of these specific firms is particularly striking given that several of them are already grappling with direct US regulatory barriers, federal sanctions, and national security designations. CATL and BYD were added to the Pentagon’s list of companies purportedly tied to the Chinese military in January 2025 and June 2026, respectively. According to a source familiar with the planning, President Xi specifically intends to bring executives from companies currently facing US sanctions or blacklists—a diplomatic maneuver that mirrors President Donald Trump’s own decision to include scrutinized Chinese-linked firms, such as semiconductor giant Nvidia, in his delegation to Beijing in May.

Testing the Boundaries of US Policy on Chinese Onshore Manufacturing

The prospective inclusion of BYD Chairman Wang Chuanfu serves as a direct stress test for the limits of President Trump’s stated economic pragmatism. Earlier in September, Trump indicated once again that he would be open to supporting Chinese automakers establishing manufacturing plants inside the United States, provided that these facilities create jobs for American workers. Yet, this conciliatory rhetoric exists in stark contrast to existing trade barriers: sweeping 100-percent tariffs on Chinese electric vehicles remain firmly in place. Furthermore, a strict rule enacted during the Biden administration is scheduled to bar China-linked automakers from selling new connected vehicles—including those assembled domestically—starting from model year 2027.

Domestic US automakers have mounted an aggressive lobbying campaign, urging the Trump administration to keep the domestic automotive market completely closed to Chinese competition. Within this domestic cohort, the stakes are arguably highest for Ford Motor Company. Ford’s ongoing licensing arrangement with CATL for a battery cell manufacturing plant in Marshall, Michigan, has already drawn heavy political fire, culminating in a critical inquiry letter from Transportation Secretary Sean Duffy.

Secretary Duffy has also publicly criticized Ford over its separate joint manufacturing venture with Geely in Spain, as well as its behind-the-scenes discussions with administration officials—including Duffy himself—regarding a potential joint-venture model that would allow Chinese automakers to operate within the United States.

Chronology of Regulatory Escalations and Policy Clashes

To understand the friction surrounding the upcoming September summit, it is necessary to examine the escalating timeline of regulatory actions, legislative hurdles, and corporate maneuvers that have shaped US-China automotive relations over recent years:

• May: President Donald Trump includes technology firms under intense regulatory scrutiny, such as Nvidia, in his official business delegation during a high-profile visit to Beijing.
• June 2026: The Department of Defense formally adds BYD to its restricted list of companies alleged to have ties to the Chinese military, following CATL’s inclusion on the same list in January 2025.
• September: US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng schedule high-level bilateral talks to finalize logistics and trade agendas ahead of President Xi Jinping’s state visit.
• September (Ongoing): President Trump reiterates potential openness to Chinese-owned auto plants on US soil contingent on American employment, while existing 100% tariffs and upcoming connected-vehicle bans remain fully active.
• Model Year 2027 Enforcement Window: Section 154 of the National Defense Authorization Act goes into effect, barring the US military from purchasing battery cells produced by CATL or sourced through its broader supply chains.

Operational and Financial Complexities for US-China Partnerships

The inclusion of CATL on the Pentagon’s restricted list carries profound operational consequences that will manifest definitively in 2027. Under Section 154 of the National Defense Authorization Act, the US military will be legally prohibited from purchasing battery cells produced by CATL or sourced through its supply chains. This legislative restriction threatens to severely complicate Ford’s commercial strategy, potentially limiting the automaker’s ability to supply defense-related vehicle fleets using batteries manufactured at its Marshall, Michigan facility.

Compounding these operational hurdles, Ford’s eligibility for lucrative federal tax credits depends entirely on maintaining a delicate legal structure. Treasury guidelines governing the Section 45X Advanced Manufacturing Production Credit rely on an "effective control" test. Currently, Ford satisfies this requirement by retaining direct ownership of the physical plant site and operational equipment. However, any structural modification to its licensing agreement with CATL risks triggering immediate disqualification under strict Foreign Entity of Concern (FEOC) regulations—a regulatory threshold that could strip the automaker of tens of millions of dollars in annual subsidies.

The broader landscape of US-China industrial friction extends far beyond Ford’s Michigan operations. In Michigan’s Green Charter Township, battery component manufacturer Gotion is currently embroiled in federal litigation, alleging that local officials improperly blocked its planned $2.36 billion EV-components facility. Meanwhile, automotive parts supplier Wanxiang agreed in December to pay more than $53 million to resolve a significant Justice Department investigation regarding customs violations and anti-dumping duties on imported Chinese auto parts. These ongoing court battles illustrate that legal and regulatory tensions are actively reshaping the automotive landscape well before any diplomatic breakthroughs at the summit.

Broader Economic Implications and Strategic Outlook

The decision to parade executives from blacklisted enterprises like BYD and CATL through Washington presents the White House with a profound diplomatic and strategic dilemma. On one hand, inviting leaders of targeted firms to a state dinner forces the executive branch to formally engage with entities it has officially designated as national security risks. On the other hand, it reflects the complex, deeply intertwined realities of the global automotive supply chain, where complete decoupling remains financially and logistically prohibitive for legacy automakers seeking to transition to electric mobility.

Whether Wang Chuanfu’s potential presence in Washington signals a genuine, foundational shift toward accepting Chinese onshore manufacturing, or merely serves as a reciprocal diplomatic courtesy mirroring Trump’s trip to Beijing in May, remains to be seen. Clarity will likely emerge only after the conclusion of the September summit, and specifically upon observing whether the diplomatic engagement yields a concrete, workable framework for how a company flagged by the Pentagon can legally and commercially build and sell automobiles within the United States.