This might be the beginning of the end of the WTO.
China is challenging US rules in the IRA that require vehicles to use parts from specific regions to qualify for subsidies while excluding products from China and others.
Trade experts say China has a strong case, though it will take many years to resolve and is likely to never be enforced. The US continues to back-door national security rules as protectionism as well, saying car software is a national security risk.
The US already has a 27.5% tariff on imported Chinese EVs. However China's cars are so competitive (in part due to their own subsidies) that some in the automotive industry worry they could still displace US cars. The Biden administration is considering increasing those tariffs.
China is facing a war on two fronts as Europe threatens to impose back-dated tariffs on Chinese EVs, which are quickly gaining market share in Europe.
European automakers share the same complaints about the IRA as their Chinese rivals and could also join the case.
