Global Trade Tensions: Analyzing the WTO Legality of the U.S. Inflation Reduction Act and Strategic Responses

Abstract

With the profound changes in the global economic landscape and the increasing proximity of the United States and China in terms of power contrasts, the hegemonic anxiety of the U.S. has been increasing, leading to the adoption of a series of protection measures in the field of trade. Among them, the Inflation Reduction Act, as an important part of the U.S. trade protectionist policy, its implementation has not only aggravated the tension in international trade, but also violated the relevant rules of the World Trade Organization (WTO). This paper elaborates the specific content of the Act and its impact on international trade, especially its large-scale subsidy policy in the field of green energy and its potential impact on the global supply chain. Subsequently, this paper analyzes in depth the illegality of the Act under the WTO framework from the perspective of prohibited subsidies and non-discriminatory principles, and argues with specific cases. Finally, this paper puts forward China's response strategy, aiming to provide theoretical support and practical guidance for China in dealing with U.S. trade protectionist policies. The purpose of this paper is to reveal the nature and impact of the U.S. trade protectionism policy, to provide theoretical support for China to safeguard its legitimate rights and interests in global trade, and to provide useful reflections and insights for China to promote trade liberalization and facilitation, strengthen international cooperation, and jointly respond to challenges in the context of global economic integration.