WTO rules U.S. clean energy tax credits violate trade rules

The WTO ruled that U.S. clean energy tax credits under the Inflation Reduction Act violate international trade rules by giving domestic products preferential treatment over Chinese goods. The decision specifically targets the ITC and PTC Domestic Content Bonus Credits.

February 3, 2026 Emiliano Bellini

Entrance to the WTO building in Geneva, Switzerland.

Image: Benoît Prieur, Wikimedia Commons, CC0 1.0

From pv magazine Global

The World Trade Organization (WTO) has ruled that U.S. investment tax credits (ITCs) and production tax credits (PTCs) for domestic clean energy manufacturing under the Inflation Reduction Act (IRA) violate multiple articles of the General Agreement on Tariffs and Trade 1994 (GATT 1994), a WTO framework designed to promote fair trade by reducing tariffs and other barriers.

The ruling found that by linking bonus subsidies to U.S.-made goods, the United States treated Chinese products less favorably than domestic ones in terms of sales, distribution, and use.

The WTO document notes that China withdrew its claims against one of the two contested measures – the Clean Vehicle Credit – after the U.S. terminated the program in July 2025 through the One Big Beautiful Bill Act (OBBBA). The ruling applies specifically to the ITC and PTC Domestic Content Bonus Credits.

China had requested the WTO to examine the legality of the ITCs and PTCs in March 2024.

The case comes amid a broader crisis at the WTO, where its main dispute settlement authority, the Appellate Body, has been paralyzed since 2019 due to U.S. blocks on judge appointments under both the Trump and Biden administrations. With the remaining judges’ terms expired and no replacements approved, the system cannot hear appeals, effectively undermining the enforcement of WTO rulings.

“Decisions by the panel can be appealed, but they are appealed into the void,” energy and environmental law expert Anatole Boute recently told pv magazine. “This paralyzes the dispute resolution process because without an appeal, disputes cannot be fully resolved and decisions cannot be enforced.”

Despite the WTO’s ongoing paralysis, China lodged a case in December with the international organization against India over the country’s subsidies for its photovoltaic sector. The Chinese government claims the measures violate several WTO obligations, including binding tariffs and national treatment, and constitute import substitution subsidies.

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