BEIJING — China on Tuesday filed a complaint with the World Trade Organization against the US over what it says are discriminatory requirements for electric vehicle subsidies.
China’s Ministry of Commerce did not say what prompted the move. But under a new U.S. rule that took effect Jan. 1, electric car buyers will not be eligible for tax breaks of $3,750 to $7,500 if critical minerals or other battery components are made by Chinese, Russian, North Korean or Iranian companies. The credits are part of US President Joe Biden’s climate legislation, called the 2022 Inflation Reduction Act.
A ministry statement did not mention the specific restriction. However, it said that under the law and its implementing rules, the US had formulated a discriminatory subsidy policy for new energy vehicles in the name of responding to climate change. The report said the US measure has excluded Chinese products, distorted fair competition and disrupted the global supply chain for new energy vehicles.
Member states of the Geneva-based WTO can file complaints about the trade practices of other members and seek relief through a dispute settlement process.
The real impact of the case is uncertain. If the United States loses and appeals the ruling, the Chinese case will likely go nowhere. That’s because the WTO’s Appellate Body, the Supreme Court, has not functioned since late 2019, when the US blocked the appointment of new judges to the panel.
China is the dominant player in electric vehicle batteries and has a fast-growing auto industry that could challenge the world’s established automakers if it goes global. Its strength lies in electric vehicles and the companies have become leaders in battery technology.
The European Union, concerned about the potential threat to its auto industry, launched its own investigation into Chinese subsidies for electric vehicles last year.
Under the new U.S. rule, only 13 of the more than 50 electric cars on sale in the U.S. were eligible for tax breaks, down from about two dozen models in 2023. Automakers have struggled to find parts that would make their models eligible qualify for these tax credits. .