THE US Commerce Department has proposed banning Chinese software and hardware for vehicles with a built-in internet connection, in a move that would in effect ban Chinese vehicles from the US market, reports London's Financial Times.

The rule follows concerns from the Biden administration about Chinese companies collecting data on American drivers and infrastructure as well as the potential for foreign adversaries to remotely manipulate connected cars on US roads.

It is the latest step in a wider US effort to crack down on Chinese vehicles, software and components. The US already sharply raised tariffs on Chinese imports this year, including a 100 per cent levy on Chinese electric vehicles.

The measure would allow some exceptions to the ban if companies could show they were taking mitigating measures, such as auditing or site checking. But officials said the rule would essentially ban Chinese vehicles.