America's 65% Rule Puts Robotics Startups in an Impossible Bind

The Policy That Arrived Too Early

The Federal Communications Commission moved last month to block foreign-made advanced robotic devices from the U.S. market unless they meet strict domestic content thresholds. The regulation places "advanced robotic devices" on the agency's Covered List, a catalog of products deemed to pose national security risks. Under the new framework, humanoid robots, quadrupeds, and even consumer devices like robotic vacuums and lawn mowers must be assembled domestically and contain at least 65% American-made components by value. That share climbs to 75% by 2029.

The rule does not name China explicitly, but the target is clear. Chinese manufacturers dominate global robotics production, accounting for nearly 90% of humanoid units sold worldwide in 2025, according to research firm Omdia. The policy exempts robots already on sale in the U.S. and allows imports for R&D purposes, but it blocks new commercial models that fail to meet the threshold.

At DailyTechWire, we've tracked Washington's growing anxiety over robotics supply chains for the past eighteen months. What distinguishes this move from prior trade actions is its timing. The FCC has imposed a manufacturing standard before the infrastructure to meet it exists.

Founders Caught Between Security and Supply Reality

Anto Patrex runs CosmicBrain AI in San Francisco, a startup developing robots that retrieve deliveries and carry laundry in residential buildings. Like many Bay Area robotics entrepreneurs, Patrex prototyped with Chinese hardware and had early units assembled in Shenzhen. Sensing regulatory headwinds earlier this year, he opened an assembly line in Canada, sourcing critical components from China. Under the new rule, those robots cannot be sold in the United States.

Patrex's frustration centers on a straightforward economic reality: even Apple, with its vast resources and decades of supply chain optimization, manufactures the majority of iPhones in China. Robots, with their motors, sensors, actuators, batteries, and control systems, are significantly more complex. The components required to build them at scale are expensive, slow to procure, or unavailable domestically.

Elizabeth Williams founded Gemma, a New York-based company designing home beauty robots that apply cosmetics. She told observers that working with a Chinese manufacturer for prototyping was the only viable path. The speed and cost advantages of southern China's integrated electronics ecosystem allowed her team to iterate quickly. Replicating that capability in the U.S., she noted, would require not just capital but also policy incentives aimed at manufacturers and component suppliers.

Michael Perry, who leads commercial strategy at Houston's Persona AI, a startup building industrial humanoid robots, said his company had already been fielding requests from U.S. clients who wanted robots free of Chinese parts. Persona AI sources components from Taiwan, Japan, South Korea, and Italy. Even so, meeting the 65% domestic threshold remains a challenge. Perry's critique is pointed: the government has provided the stick but not the carrot. Banning foreign products without investing in domestic supply chains leaves startups stranded.

How China Built the Infrastructure America Lacks

Over four decades, as U.S. technology companies offshored manufacturing to cut costs, Beijing pursued a different strategy. State subsidies, a deep engineering talent pool, and low labor costs built the world's most efficient electronics manufacturing base. Apple assembles roughly 80% of its iPhones in China and sources a significant share of components domestically within the country.

The rise of electric vehicles in China accelerated the development of adjacent industries: sensors, batteries, and actuators that convert electrical energy into mechanical motion. These are the same components that power robots. Proximity to this ecosystem has allowed Chinese robotics firms to prototype faster and cheaper than competitors elsewhere. The result is a generation of robots that are both highly capable and affordable.

Unitree, a Chinese manufacturer, has become a fixture in American university labs and startups. Its quadrupeds and humanoids are used to develop software and test algorithms. The company's products combine dexterity with price points that U.S. manufacturers have struggled to match.

Washington's concern is not just about current market share but about long-term dependency. The Covered List, established by Congress in 2021, gives the FCC authority to ban devices that pose national security risks. Foreign-made drones, routers, and telecommunications equipment from Huawei and ZTE have previously been added. In justifying the robot ban, the FCC cited security vulnerabilities discovered in Unitree devices and an incident in which a user of a DJI robotic vacuum inadvertently accessed 7,000 other units through a system flaw. DJI, best known for drones, also manufactures cameras, microphones, and consumer robots.

Adam Chan, a senior adviser to FCC chair Brendan Carr, argued on a recent podcast that the optimal time to address supply chain dependency is before it becomes entrenched. The ban, he said, is designed to incentivize onshoring. Companies that wish to import foreign robots can apply for conditional approval, but they must submit a detailed plan for establishing U.S. manufacturing.

The Tension Between Protection and Pragmatism

The ban has drawn mixed reactions from the robotics community. Kyle Chan, a fellow at the Brookings Institution, suggested that a phased approach, such as gradually increasing tariffs on Chinese robots and components, would better serve American startups. An abrupt ban risks saddling young companies with prohibitive manufacturing costs at a stage when capital efficiency is critical. The policy, he warned, could stifle innovation rather than protect it.

The FCC has previously banned new foreign-made drones and routers. While older models remain available, the Trump administration announced additional tariffs on drones last week, framing the move as support for domestic production. The cumulative effect of these measures has intensified trade friction between Washington and Beijing. China's Ministry of Commerce criticized the U.S. for what it called an overreach of national security concerns and for disrupting international trade norms. In August, Beijing imposed restrictions on several American entities and tightened export controls on drones bound for the U.S., citing both the FCC decision and separate sanctions related to alleged labor abuses in Xinjiang.

Some U.S. robotics firms view the ban as a necessary buffer against Chinese competition. Agility Robotics, which assembles warehouse robots in Oregon, issued a statement supporting the FCC rule as an important step toward addressing national and economic security concerns. The company also called for maintaining access to the tools and technologies needed to advance research. Whether Agility currently sources 65% of its components domestically could not be confirmed; the company did not respond to inquiries.

Antonio Li, founder of San Francisco's Nori Robotics, acknowledged that his company relies heavily on motors and actuators manufactured in Asia. He expects the FCC rule to stimulate growth among American suppliers over time. While the ban introduces supply chain complications in the near term, Li believes it will redirect research institutions and software developers toward U.S. hardware. For companies like his, that shift represents a competitive advantage.

The Carrot That Isn't There

The central tension in the FCC's approach is one of sequencing. The policy assumes that regulatory pressure alone can conjure a supply chain into existence. But the infrastructure required to manufacture robots at commercial scale involves not just assembly facilities but also upstream component suppliers, logistics networks, and technical expertise. Building that ecosystem takes years and requires coordinated investment.

Employees at some Silicon Valley robotics companies have reportedly flown from China to the U.S. with robot parts in their luggage to expedite prototyping. The anecdote underscores the gap between policy ambition and operational reality. Startups operate on tight timelines and constrained budgets. When the components they need are unavailable domestically, they face a choice: delay product development or risk non-compliance.

The 65% threshold is not arbitrary; it is designed to ensure that a meaningful share of value creation occurs within U.S. borders. But for founders working in a sector where motors, sensors, and actuators are predominantly manufactured in Asia, the requirement feels less like a growth catalyst and more like a barrier. The policy's architects argue that short-term pain is acceptable if it leads to long-term strategic autonomy. The startups bearing that pain are less certain.

Forward into Uncertainty

The FCC's robot ban reflects a broader recalibration of U.S. trade and technology policy. After decades of offshoring, Washington is attempting to reverse course, prioritizing security and resilience over cost efficiency. The challenge is that supply chains are not easily rewound. They are the product of incremental decisions made by thousands of firms over decades, shaped by labor costs, logistics, regulatory environments, and market proximity.

Robotics sits at the intersection of hardware, software, and artificial intelligence. It is a sector where the U.S. retains significant strengths in research and algorithm development but lags in manufacturing. The FCC's rule is a bet that regulatory intervention can accelerate onshoring before Chinese dominance becomes irreversible. Whether that bet pays off depends on factors beyond the agency's control: capital availability, supplier willingness to invest in new capacity, and the ability of startups to survive the transition period.

For now, founders are improvising. Some are exploring assembly in Canada or Mexico, hoping to satisfy the spirit if not the letter of the rule. Others are lobbying for conditional approvals or seeking exemptions for R&D. A few are betting that the ban will ultimately benefit them by constraining lower-cost competitors. But across the industry, the prevailing sentiment is uncertainty. The rule has redefined the boundaries of the U.S. robotics market. What it has not yet done is provide a clear path to operating within them.