The European Union imposed tariffs of up to 45% on Chinese-made electric vehicles to protect its automotive industry. China responded — not by retreating from the European market, but by redirecting. Around $6 billion in Chinese capital has flowed into Morocco since the pandemic. Battery gigafactories, EV component plants, and supply chain infrastructure are rising near the port of Kenitra, a short crossing from the Spanish coast. The tariffs are working as designed. They are also producing consequences nobody fully anticipated.
The Geography of the Workaround
Morocco’s strategic position is almost comically convenient for this purpose. The Strait of Gibraltar is 14 kilometres wide. Morocco already exports over €26 billion annually to the EU — roughly a third of its total exports — under an association agreement that has eliminated most tariffs on automotive goods. Renault and Stellantis both operate large manufacturing facilities there. The infrastructure, the logistics, the labour market, and the trade architecture were already in place.
In the 2021–2023 period, countries in the Middle East and North Africa received less than 2% of China’s global FDI in electric vehicles. By 2024, that share had risen to 25% — a shift that corresponds precisely with the tightening of tariffs and trade measures in Europe and the United States. The investment wave is not coincidental. It is a direct response to the changed tariff environment, and Morocco is the most attractive destination because it combines manufacturing viability with preferential EU market access.
Gotion High-Tech is building a gigafactory near Kenitra, positioning it as one of the world’s largest battery manufacturers. The facility is expected to become the largest battery plant in Africa by the end of 2026, starting with a $1.3 billion investment that could scale up to $6.4 billion. BTR New Material Group, the world’s largest supplier of battery anodes, is building another facility. APG, a Chinese brakes manufacturer, is opening a $70 million facility in the same zone this year.
What Rules of Origin Actually Mean
The EU’s tariffs on Chinese EVs apply to vehicles manufactured in China. A vehicle assembled in Morocco from Chinese components is a different legal question — and that question sits at the heart of the current dispute. The relevant concept is rules of origin: the criteria that determine where a product is legally considered to have been made.
EU rules of origin for electric vehicles require that a minimum proportion of a vehicle’s value be added in the country of claimed origin. The battery — typically the most valuable single component of an EV — is particularly scrutinised. EU officials are scrutinising Morocco as a potential platform for Chinese tariff circumvention. Their concern is growing because distinguishing legitimate industrial collaboration from tariff circumvention is difficult.
This is not a hypothetical concern. In 2022, the European Commission extended anti-dumping duties on Chinese glass fibre fabrics to imports consigned from Morocco. An investigation confirmed that a Chinese manufacturer had established operations in Morocco specifically to re-export goods to the EU and avoid trade defence duties. The EV situation is structurally similar and considerably larger in scale.
Morocco’s Position Is More Complex Than It Appears
Moroccan officials push back firmly on the backdoor characterisation. Moroccan Investment and Export Development Agency official Yassine Elahyani reminded Chinese investors that exports to Europe must meet strict rules of origin requirements. He also stressed that companies must comply with EU standards. Morocco’s trade minister has stated publicly that the country expects a “complete value chain” for EVs. He emphasised that this should go beyond assembling imported components and include genuine domestic manufacturing depth.
That distinction matters. There is a real difference between a facility that receives Chinese components and bolts them together, and one that conducts meaningful manufacturing operations that create local economic value. Morocco’s existing automotive base — built around European manufacturers over decades — has genuine industrial capability. Whether the Chinese investment wave builds on that capability or uses it as cover for circumvention is the question Brussels is trying to answer.
The challenge for European policymakers goes beyond preventing tariff circumvention and protecting domestic manufacturers. They also need to align Europe’s trade, industrial, and neighbourhood policies more coherently. Engaging partners as part of a broader EV and clean-tech ecosystem, rather than treating the region solely as a site of competitive leakage, will be essential. Morocco is also a partner in EU energy diversification, a neighbour with significant geopolitical weight, and a country with genuine industrial ambitions. Treating it purely as a tariff loophole misreads the situation.
The Three-Layer Supply Chain
What is emerging from this dynamic is a new industrial geography. This structure operates in three layers: China produces core components, Morocco assembles and adds local value, and the EU receives the finished product under favourable trade terms. Analysts say China is in a position to build an integrated supply chain in Morocco. This could include phosphate processing for batteries, as well as factories and transport links to ports. It would increase Morocco’s strategic importance for both Beijing and Brussels.
The EU’s proposed Industrial Accelerator Act would restrict non-European content in products benefiting from EU industrial support — a measure specifically aimed at this dynamic. But regulation trails investment. The $6 billion is already committed. The gigafactories are under construction. By the time rules are tightened, the supply chains will be built.
What a Tariff Actually Does
The EU’s EV tariffs were designed to protect European manufacturing from subsidised Chinese competition. They are doing that, in a narrow sense. Chinese-made EVs face a steeper path to the European market. But as explored in “the Cape of Good Hope shipping shift,” trade flows respond to friction by finding new routes — not by stopping.
Since the EU had tariffs on Chinese EVs and both Morocco and Turkey have access to the EU market through association agreements, this looked like a potential way for Chinese automakers to circumnavigate EU tariffs. That potential is now being actively realised. Tariffs reshape geography. They do not eliminate competitive pressure. The EU is learning this lesson in real time — and the question of what comes next will define the shape of the European automotive industry for the next decade.
Key Sources
- Morocco World News, “China Funnels $6 Billion Into Morocco, Stoking EU Tariff Alarm”: https://www.moroccoworldnews.com/2026/06/312712/china-funnels-6-billion-into-morocco-stoking-eu-tariff-alarm/
- European Council on Foreign Relations, “EV endgame: Stalling China’s export surge in Europe’s southern neighbourhood”: https://ecfr.eu/publication/ev-endgame-stalling-chinas-export-surge-in-europes-southern-neighbourhood/
- Traders Union, “Morocco draws Chinese auto supply investment as EU weighs trade risks”: https://tradersunion.com/news/financial-news/show/2183457-morocco-chinese-auto-supply-eu-risk/
- European Commission, “EU acts to stop Chinese glass fibre fabrics circumventing EU tariffs via Morocco”: https://policy.trade.ec.europa.eu/news/eu-acts-stop-chinese-glass-fibre-fabrics-circumventing-eu-tariffs-morocco-2022-02-25_en
- China-MENA Newsletter, “Morocco as a Chinese Industrial Base?”: https://chinamenanewsletter.substack.com/p/morocco-as-a-chinese-industrial-base
- Reuters / AOL, “Factbox: EU tariffs on imports of China-made EVs”: https://www.aol.com/articles/factbox-eu-tariffs-imports-china-115318401.html
- IEA, Global EV Outlook 2026, Manufacturing and Trade: https://www.iea.org/reports/global-ev-outlook-2026/manufacturing-and-trade
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