China to Challenge Biden’s EV Plans at WTO

On Tuesday, China lodged a complaint with the World Trade Organization (WTO) against the United States, challenging what it perceives as biased conditions attached to subsidies for electric vehicles (EVs).

Under the provisions that began this year, American consumers cannot receive tax benefits ranging from $3,750 to $7,500 for purchasing EVs if the essential minerals or battery components originate from companies in China, Russia, North Korea, or Iran. These tax incentives are a key element of the climate change initiative spearheaded by U.S. President Joe Biden, known as the 2022 Inflation Reduction Act.

The Chinese Ministry of Commerce criticized these U.S. policies in an online statement, accusing them of being prejudicial under the guise of climate change response. The ministry argued that these measures unfairly exclude Chinese products, undermining free competition and disturbing the international supply chain for EVs.

WTO member states, headquartered in Geneva, have the prerogative to challenge each other’s trade practices and pursue resolutions through the organization’s dispute settlement mechanism.

China, a leading force in electric vehicle battery production and an emerging power in the automotive sector, could potentially rival established global car manufacturers, especially in the realm of electric vehicles and battery technology.

The European Union, wary of the implications for its automotive industry, initiated an inquiry last year into Chinese subsidies for electric vehicles.

With the implementation of the new U.S. regulations on January 1, only 13 out of more than 50 EV models available in the U.S. qualify for tax credits, a significant reduction from around two dozen models in 2023. This has prompted automakers to urgently seek alternative sources for parts to ensure their vehicles are eligible for these incentives.