But most observers read China’s move as a warning shot in an increasingly high-stakes trade skirmish, as China, the United States and the European Union explore the new geopolitics of advanced manufacturing and a clean-energy transition. China’s leverage over the global critical minerals supply explains why the particulars of the Inflation Reduction Act are so important. It does this, in part, by providing generous incentives for domestic production of critical minerals, battery components and batteries. For a vehicle to be eligible for the subsidy, in addition to meeting price caps, final assembly must take place in North America, and an increasing percentage of the critical minerals and battery components must be sourced from North America or, in the case of critical minerals, from free-trade partners. So as the United States expands investments in clean energy manufacturing, its dependency on global supply chains, dominated by China, will only grow.

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Persons: Biden Organizations: European Union, China, Treasury Department, Wellesley College Locations: China, United States, European, North America