On Tuesday, China filed a complaint with the World Trade Organization against the U.S. over discriminatory requirements for electric vehicle subsidies. The Chinese Commerce Ministry did not specify what prompted this move, but it accused the U.S. of formulating unfair policies under the 2022 Inflation Reduction Act that exclude Chinese products and distort fair competition in the global supply chain for new energy vehicles.
The U.S. has recently implemented a new rule that states electric car buyers cannot receive tax credits of $3,750 to $7,500 if critical minerals or other battery components were manufactured by companies from China, Russia, North Korea, or Iran. This policy has affected Chinese companies that are major players in the electric vehicle battery industry and could challenge established carmakers globally.
China is a dominant player in the electric vehicle battery industry and has a growing auto industry that could challenge established carmakers globally. The European Union has also raised concerns about Chinese subsidies for electric vehicles due to their potential impact on fair competition and global supply chains.
The impact of this case remains uncertain as member countries of the WTO can file complaints against each other’s trade practices and seek relief through a dispute settlement process. However, if the U.S loses and appeals the ruling, progress may not be made due to the WTO’s Appellate Body not functioning since 2019.
In summary, China filed a complaint with the WTO accusing the U.S of having discriminatory requirements for electric vehicle subsidies under President Biden’s climate legislation, which excludes Chinese products and distorts fair competition in the global supply chain for new energy vehicles. The new U.S rule affects Chinese companies that are major players in the electric vehicle battery industry and could challenge established carmakers globally while European Union raises concerns about Chinese subsidies for electric vehicles due to their potential impact on fair competition and global supply chains.
