China jolts US at WTO with complaint over ‘discriminatory’ EV subsidies
- China has hit out against what it has deemed ‘discriminatory’ subsidies from the US over electric vehicles, filing formal complaint at WTO
- Action is latest in long history of bilateral trade disputes, with EV sector being key battleground in global green transition
The grievance was lodged to support a fair environment for Chinese auto manufacturers and the global industry, China’s Ministry of Commerce said on Tuesday.
“Under the pretext of ‘responding to climate change’ and ‘environmental protection’, the US has formulated discriminatory policies through its Inflation Reduction Act regarding new energy vehicles, excluding products from China and other WTO members from subsidies,” the ministry said in a statement.
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“Such exclusions distort fair competition, disrupt global industrial and supply chains and violate WTO principles such as national treatment and most-favoured-nation treatment.”
The act requires EVs to undergo final assembly in North America to qualify for subsidies. “For new electric, fuel cell electric, and plug-in hybrid electric vehicles acquired, delivered and placed in service after August 16, 2022,” said the US Department of Energy in a note, “this requirement applies”.
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“China is firmly opposed,” the commerce ministry said. “We urge the US to abide by WTO rules, respect the development trend of the global new energy vehicle industry and rectify its discriminatory policies.”
Carlos Gutierrez, a former US commerce secretary, told the Post at the Boao Forum for Asia on Tuesday any hypothetical tariffs imposed on “made by China” goods assembled in a third country like Mexico, including electric vehicles, would be “unfortunate”.
China’s EV exports had a roaring 2023, up 77.6 per cent year on year and with more than 120 million vehicles shipped according to official data.
But that boom may not last. With risks of overcapacity looming and external pressures likely from the US and European Union, the three products may see their blockbuster growth stunted this year.
Shortly thereafter, the White House announced it would be conducting its own investigation into China’s vehicles, which could lead to heavier import tariffs.
Former US president Donald Trump, well into his campaign to retake the White House, has also threatened to slap 100 per cent duties on Chinese EVs assembled in Mexico. Trump is the architect of the trade war with China, now in its sixth year.
Long Yongtu, China’s former chief trade negotiator who helped the country’s accession to the UN trade body, said at the Boao Forum that China would make full use of WTO mechanisms to settle disputes and defend its interests.
