China’s largest electric vehicle manufacturer, BYD, has filed a lawsuit against the United States government, seeking refunds for import tariffs imposed during the administration of U.S. President Donald Trump. The case was filed in the U.S. Court of International Trade and focuses on duties paid on imported materials used in BYD’s American operations.
BYD argues that the tariffs were unlawfully imposed using emergency powers. The company states that it has paid substantial duties even though it does not sell passenger vehicles in the United States. High tariffs and regulatory hurdles have limited BYD’s U.S. business to electric buses and electric trucks.
The lawsuit applies only to tariffs connected to BYD’s current U.S. operations. The company’s American subsidiaries, which support manufacturing activities such as electric bus production in California, provide the legal standing needed to bring the challenge in a U.S. court.
Why BYD Is Challenging Trump-Era Tariffs in Court
The legal challenge centers on the use of the International Emergency Economic Powers Act (IEEPA). BYD argues that this law does not authorize tariffs because the statute does not include the word “tariff.” Based on this interpretation, the company claims the duties collected under this authority were invalid.
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BYD is seeking refunds, along with interest, for tariffs paid since April 2025. The lawsuit was filed to meet strict legal deadlines. Under U.S. trade rules, companies that fail to submit claims on time may lose the right to recover paid duties, even if courts later determine the tariffs were unlawful.
This legal argument has already been tested in U.S. courts. In V.O.S. Selections v. Trump, lower courts ruled that similar import duties imposed under the same authority were unlawful. That case is currently pending before the U.S. Supreme Court, with a decision expected in early 2026.
Due to this uncertainty, more than 1,000 corporate entities have filed similar lawsuits. These filings serve as a protective measure, ensuring companies remain eligible for refunds if courts rule in favor of importers.
If BYD succeeds, the ruling could reduce duty barriers for other companies that paid similar tariffs. However, the broader impact remains uncertain. Even if these tariffs are overturned, the U.S. government could impose new duties under Section 301, which targets unfair trade practices, or Section 232, which is based on national security concerns.
Global Expansion, Market Reaction, and Cost Pressures
Alongside its U.S. legal challenge, BYD is expanding its global manufacturing footprint, with South America emerging as a key region. Brazil plays a central role in this strategy.
BYD is investing approximately 5.5 billion Brazilian reais in a new manufacturing facility in Camaçari, built on a site formerly occupied by Ford. The plant is expected to have an annual production capacity of 150,000 vehicles, with a localization target of 50% for components.
This expansion follows BYD’s increased market share in Europe during 2025. The company has also announced plans to enter the Canadian market later in the 2026 fiscal year.
Investor reaction to the lawsuit has been cautious. BYD’s U.S.-listed shares, traded as BYDADR, declined 0.58% to $12.00 in the latest trading session. The company’s market capitalization stands at approximately $114.64 billion.
Financial performance shows mixed results. BYD reported $118.15 billion in trailing twelve-month revenue, reflecting a 23.3% year-over-year increase. However, third-quarter 2025 revenue declined by 3.05% compared with the same period a year earlier.
Cost pressures remain a concern. The price of lithium carbonate, a key battery material, has risen by more than 76% within a year, increasing pressure on profit margins.