The United States has been hit with a complaint from China over discriminatory subsidy requirements for electric vehicles. The complaint was filed with the World Trade Organization (WTO) by China, alleging that the new U.S. rule is unfair and undermines fair competition in the global electric vehicle supply chain.

Under the Inflation Reduction Act of 2022, electric car buyers are not eligible for tax credits if certain battery components were made by companies in China, Russia, North Korea, or Iran. This move is aimed at addressing climate change but has also led to a reduction in the number of eligible electric vehicles in the US market.

China’s Ministry of Commerce did not provide a specific reason for the complaint, but stated that the new policy is discriminatory and excludes Chinese products from receiving subsidies. The outcome of the case remains uncertain as the WTO Appellate Body has been inactive since 2019 due to U.S blocking appointments of new judges.

The European Union has also expressed concern about Chinese subsidies for electric vehicles and launched an investigation into them. As a major player in battery and electric vehicle technology, China is rapidly expanding its auto industry, which poses a challenge to established automakers around the world.

This new rule has prompted automakers to source components to meet the requirements, leading to a reduction in eligible EV models on offer in the US market.

In conclusion, this dispute highlights concerns about fair competition and access to subsidies within

By Samantha Johnson

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