China bypasses US tariffs through Morocco

Since May, both the United States and the European Union have imposed new tariffs on Chinese electric vehicle parts, while the United States simultaneously offers subsidies to automakers that use parts from countries that have free trade agreements with the United States.

Also Read: Chinese car firm wants to capture Moroccan market

A free trade agreement with the United States and its proximity to Europe have made Morocco an attractive destination for Chinese companies. Eight Chinese factories have already been announced near Tangier and on the Atlantic coast to produce electric vehicle components. These parts could qualify for a US subsidy of $7,500 per car, which would significantly improve the competitiveness of Chinese manufacturers in the US market.

According to Wood Mackenzie analyst Kevin Shank, the strategy is a response to the US deflationary law, which will stimulate domestic production of electric vehicles. “By shifting their operations to US trading partners like Morocco, Chinese companies are trying to take advantage of growing demand from US automakers like Tesla and General Motors,” Zhang said.

Also Read: China builds battery supply chain in Morocco for Europe

New US rules impose stricter requirements on the origin of raw materials and electric vehicle parts to qualify for subsidies. While the rules are intended to reduce dependence on China, some experts warn that they could lead to further strengthening of China’s dominance in the electric vehicle parts market.