Modern Social Science Research

This paper aims to analyze the WTO compliance and global impacts of the new energy vehicle subsidy provisions stipulated in the U.S. Inflation Reduction Act, and explore China’s coping strategies. The research indicates that the subsidy rules for new energy vehicle purchases under the Act adopt discriminatory measures such as local content requirements, which essentially constitute import substitution subsidies prohibited by the Agreement on Subsidies and Countervailing Measures (SCM Agreement). They violate the most-favored-nation treatment and national treatment principles under the General Agreement on Tariffs and Trade 1994 (GATT 1994), and cannot be exempted by security exception clauses. This move has exacerbated unilateralism and the anti-globalization trend, distorted the division of global supply chains, and posed challenges to the long-term development of China’s new energy vehicle industry. Accordingly, China should safeguard its legitimate rights and interests through the WTO dispute settlement mechanism, strengthen the resilience of domestic industrial chains, expand international cooperation, and actively promote multilateralism to address the impacts on the global trading system.

Inflation Reduction Act; WTO compliance; Most-favored-nation treatment; National treatment; New energy vehicles; Anti-globalization