U.S. Inflation Reduction Act creates electric battery barriers

Cartoon by Ma Hongliang

On Jan. 1, 2024, the U.S. Inflation Reduction Act implemented new battery procurement rules. These rules specifically exclude vehicles that utilize battery components made by Chinese manufacturers from receiving tax credits.

In August 2022, the U.S. government introduced the Inflation Reduction Act, which includes provisions for a maximum tax credit of $7,500 for some new electric vehicles.

Following the implementation of the new rules, the number of electric vehicle models eligible for subsidies is expected to decrease by approximately 50 percent compared to 2023.

This is clearly a case of the U.S. politicizing economic issues and creating trade barriers in the battery supply chain. It is not the only approach the U.S. is taking to suppress China's new energy industry chain. Reports suggest that the Biden administration is considering tariff increases, particularly on Chinese electric vehicles.

The U.S. is urged to stick to WTO rules, uphold a fair trade order for equitable competition, and establish a business environment that is fair, impartial, and non-discriminatory to companies from all nations.