DISPUTE SETTLEMENT

DS: United States — Certain Tax Credits Under the Inflation Reduction Act

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

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Summary of the dispute to date

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Consultations

Complaint by China

On 26 March 2024, China requested consultations with the United States with respect to certain subsidies that the United States allegedly provides under the Inflation Reduction Act (IRA) that are contingent upon the use of domestic over imported goods or that otherwise discriminate against goods of Chinese origin. These comprise: (i) the Clean Vehicle Credit; and (ii) the Renewable Energy Tax Credits (including the Investment Tax Credit for Energy Property; the Clean Electricity Investment Tax Credit; the Production Tax Credit for Electricity from Renewables; and the Clean Electricity Production Tax Credit).

China claimed that the challenged measures appear to be inconsistent with:

  • Article III:4 of the GATT 1994;
     
  • Articles 2.1 and 2.2 of the TRIMS Agreement; and
     
  • Articles 3.1(b) and 3.2 of the SCM Agreement.

In addition, China claimed that the Clean Vehicle Credit appears to be inconsistent with Article I:1 of the GATT 1994.

On 5 April 2024, the United States requested the Chair of the DSB to circulate to Members a communication where it indicated that the United States accepted China's request to enter into consultations, without prejudice to whether each of the items in China's consultations request constituted a “measure” within the meaning of Article 4 of the DSU, or whether the request raised issues of national security not susceptible to review or capable of resolution by WTO dispute settlement.

 

Panel and Appellate Body proceedings

On 15 July 2024, China requested the establishment of a panel. At its meeting on 26 July 2024, the DSB deferred the establishment of a panel.

At its meeting on 23 September 2024, the DSB established a panel. Argentina, Australia, Brazil, Canada, Colombia, Ecuador, the European Union, Hong Kong, China, Indonesia, Israel, Japan, Korea, Malaysia, Mexico, Norway, the Russian Federation, Singapore, Switzerland, Thailand, Türkiye, United Arab Emirates, the United Kingdom, Venezuela, and Viet Nam reserved their third-party rights.

On 10 December 2024, China requested the Director-General to compose the panel. On 19 December 2024, the Director-General composed the panel.

On 16 June 2025, the Chair of the panel informed the DSB that, in accordance with the panel's timetable adopted following consultations with the parties, the panel did not expect to issue its final report to the parties before the last quarter of 2025. The Chair also apprised the DSB that the report would be available to the public once it was circulated to the Members in all three official languages, and that the date of circulation depends on completion of translation.

 

On 30 January 2026, the panel report was circulated to Members.

China withdrew its claims against one of the two measures at issues, the Clean Vehicle Credit, after that measure was terminated by the United States in July 2025 through the One Big Beautiful Bill Act (OBBBA). Regarding the Renewable Energy Tax Credits (ITC/PTC Domestic Content Bonus Credits, including the Investment Tax Credit for Energy Property; the Clean Electricity Investment Tax Credit; the Production Tax Credit for Electricity from Renewables; and the Clean Electricity Production Tax Credit), the Panel found that:

  1. the ITC/PTC Domestic Content Bonus Credits were inconsistent with Article III:4 of the GATT 1994 because by making eligibility for bonus subsidy amounts conditional on the use of US-origin goods, the United States did not accord to products of Chinese origin treatment no less favourable than the treatment accorded to like products of national origin in respect of laws, regulations, and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of the affected products;
  2. the ITC/PTC Domestic Content Bonus Credits were inconsistent with Article 2.1 of the TRIMs Agreement because the eligibility conditions are investment measures related to trade in goods that are inconsistent with Article III:4 of the GATT 1994;
  3. the ITC/PTC Domestic Content Bonus Credits were inconsistent with Articles 3.1(b) and 3.2 of the SCM Agreement because they are subsidies granted or maintained by the United States contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods; and
  4. the United States failed to demonstrate that the ITC/PTC Domestic Content Bonus Credits were measures necessary for the protection of US public morals under Article XX(a) of the GATT 1994.

On 23 February 2026, the United States notified the DSB of its decision to appeal certain issues of law and legal interpretations in the panel report. On 26 February 2026, China informed the DSB that it had taken note of the United States' decision to appeal and that, given the current non-operational situation of the Appellate Body, it considered that all subsequent procedural deadlines in the Working Procedures for Appellate Review were suspended. China also noted that the United States did not file an appellant submission in accordance with Rule 21(1) of the Working Procedures for Appellate Review. China further indicated that it reserved its full right to file its own appeal on issues of law and legal interpretation in the panel report and to respond to the United States' appeal, and that it would await the instructions of the Appellate Body in this respect.

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