China is Unhappy with the Inflation Reduction Act and Has Complained to the WTO

Chris Teague
by Chris Teague

Among many other things, the Inflation Reduction Act changed the way EV tax credits work in the United States. With an eye on reducing America’s dependence on Chinese batteries and materials, the Act incentivizes automakers to source materials from free-trade-compliant countries and build EVs in North America. Now, China is expressing its unhappiness with the legislation by raising a dispute with the World Trade Organization.

The Chinese Ministry of Commerce claimed the Inflation Reduction Act is “discriminatory” and said it has “seriously distorted” supply chains. At the same time, the U.S. is making similar claims against China, saying the country has used unfair policies to manipulate the global market in its favor.

Legal experts say this case might not be so airtight for China, noting that the U.S. will mount a vigorous defense. That said, the Inflation Reduction Act apparently does run afoul of WTO rules, which has already been pointed out by the EU.

U.S. politicians of all sorts have expressed distrust of China, and no one appears ready to go soft on the Asian giant’s EVs. The country’s electric vehicle industry has grown rapidly in recent years, as government subsidies and other incentives have driven research and development of new models.

While BYD, China’s largest EV maker, has said it would not come to the U.S., others might. Additionally, Chinese EVs are expanding their reach into Mexico, and some expect other brands to reach the U.S. by 2025 or shortly after. That said, there is still the matter of Chinese tariffs, which can add thousands to the price of a new EV as it enters the United States.

[Image: Tada Images via Shutterstock]

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Chris Teague
Chris Teague

Chris grew up in, under, and around cars, but took the long way around to becoming an automotive writer. After a career in technology consulting and a trip through business school, Chris began writing about the automotive industry as a way to reconnect with his passion and get behind the wheel of a new car every week. He focuses on taking complex industry stories and making them digestible by any reader. Just don’t expect him to stay away from high-mileage Porsches.

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  • Jpolicke Jpolicke on Mar 28, 2024

    In a communist dictatorship, there isn't much export activity that the government isn't aware of. That being the case, if the PRC wanted to, they could cut the flow of fentanyl down to a trickle. Since that isn't happening, I therefore assume Xi Jinping doesn't want it cut. China needs to feel the consequences for knowingly poisoning other countries' citizens.

    • See 1 previous
    • MaintenanceCosts MaintenanceCosts on Apr 01, 2024

      @Slavuta a quite impressive job of expressing as many unsupported conspiracy theories as possible in very few words.

  • VoGhost VoGhost on Apr 01, 2024

    Interesting. Oil wealthy gulf nations, Russia, January 6 traitors, and now China all hate the Inflation Reduction Act. But who does like the IRA?

    - People on prescription drugs, because prices are coming down, starting with insulin at $35/month

    - Companies that run on electricity, because generation supply is increasing rapidly

    - People who like to have jobs, because of all the factories being built to make EVs, solar panels and batteries.

    - American consumers, who like getting 30% off the price of sustainable energy from solar

    - People who like getting $7,500 of their taxes back when they buy an efficient car built in America

    - People who like that inflation is now down to 2.5% in the US

    - In short, Americans.

    • ToolGuy ToolGuy on Apr 01, 2024

      Again, VoGhost, if you can just post a link to the talking points you are paid to work from and skip the acerbic commentary, that would be great.

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