In a bold legal maneuver, Chinese electric vehicle giant BYD has initiated a direct challenge against U.S. tariff policy. The company has become the first major Chinese automaker to file a lawsuit seeking the return of duties already paid to the United States. This action opens a new judicial front for the firm at a time of softening sales, potentially escalating existing trade tensions between Washington and China’s EV sector.
Financial and Strategic Motivations
The lawsuit, filed on January 26 by four U.S. subsidiaries of BYD at the U.S. Court of International Trade, is financially driven. The company is seeking a refund of tariffs paid since April 2025. This legal push aligns with a broader wave of similar complaints from global corporations. Its prospects are closely tied to a separate, pending high-stakes decision from the U.S. Supreme Court, which is currently examining the legality of the presidential tariff powers in question.
At the core of the complaint is a challenge to the use of the International Emergency Economic Powers Act (IEEPA). BYD’s legal team argues the statute does not grant the president authority to impose tariffs, noting the text of the IEEPA contains no reference to “tariffs” or equivalent terms. The act was invoked by former President Donald Trump.
Operational Headwinds Frame Legal Gambit
This aggressive legal strategy unfolds against a backdrop of operational challenges. BYD’s global vehicle sales for January fell 30.1% year-over-year to 210,051 units, marking the fifth consecutive monthly decline.
The company has also revised its export targets downward. For the current 2026 fiscal year, BYD now anticipates 1.3 million vehicle deliveries to international markets. While this represents a 24% increase over 2025, it falls short of the original, more ambitious goal of up to 1.6 million units.
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A Established U.S. Footprint Amid Expansion
Despite not selling passenger cars in the United States, BYD maintains significant commercial operations there, focusing on:
* Buses and commercial vehicles
* Battery and energy storage systems
* Solar panel manufacturing
Notably, BYD North America operates a truck manufacturing facility in Lancaster, California, employing 750 people—a fact that adds a layer of domestic political complexity to the trade dispute.
Concurrently, the company continues to advance its global diversification strategy. A new factory in Hungary is scheduled to begin production this year, with additional manufacturing sites planned for Turkey and Indonesia. Furthermore, on February 10, BYD unveiled the ATTO 3 EVO for the European market, a technically enhanced version of its popular electric SUV.
Market Reaction
Investors appear to be looking beyond the immediate legal and sales challenges, focusing instead on BYD’s long-term expansion blueprint. Trading on the Hong Kong exchange, the company’s shares have remained stable, priced around HKD 95.80. Since the start of the year, the stock has registered a gain of approximately 6.4%.
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