On a 500-hectare stretch of farmland outside the Moroccan port city of Tangier, sheep still graze right up to the walls of an industrial complex that has become an unexpected front in the trade war between Europe and China. Inside the Mohammed VI Tanger Tech City, nearly a dozen Chinese auto-parts and battery manufacturers are racing to build factories. Sentury Tire is already operating. BTR New Material Group, the world's largest supplier of battery anodes, is constructing a plant. APG, a Chinese brakes manufacturer, plans to open a $70 million facility this year. Roughly $6 billion in Chinese capital has poured into Morocco since the pandemic, according to Rhodium Group data, and EU officials are increasingly alarmed.
The reason is geography married to paperwork. Morocco sits a short ferry ride from Spain and holds free-trade agreements covering some 50 countries — including the European Union and the United States — granting access to roughly 2.5 billion consumers. The country markets itself to overseas manufacturers with a five-year business-tax holiday, a young workforce, and green energy. For Chinese carmakers facing EU tariffs of up to 45% on electric vehicles, that combination is irresistible. Build a factory in Tangier, finish the components there, and the goods can in principle enter Europe tariff-free.
Brussels is not amused. EU Trade Commissioner Maroš Šefčovič described the investment as a symptom of Chinese industrial overcapacity at home being routed through 'transshipment' — using trade partners as middlemen. 'It's becoming a big, big issue for the European economy,' he warned. The EU has stepped up trade defences against both China and its trade surrogates: last year the European Commission penalised aluminium wheels shipped from Morocco after concluding they were unfairly subsidised by both Rabat and Beijing's Belt and Road Initiative. The OECD estimates China subsidises its industry at between three and eight times the rate of OECD member countries, often through soft loans that are hard to detect.
But here's the catch: punishing Morocco is harder than it looks. Renault and Stellantis — the owner of Peugeot — run major assembly plants in the country, embedding it firmly in European supply chains. The EU is Morocco's largest trade partner, with more than €26 billion of Moroccan exports flowing north in 2025, roughly a third of the country's total. EU officials concede that distinguishing genuine Chinese industrial collaboration from tariff circumvention is genuinely difficult.
Moroccan officials reject the backdoor accusation. Yassine Elahyani, head of emerging industries at the Moroccan Investment and Export Development Agency, told a Casablanca investor conference that the country could be 'one of the best partners' for the EU's industrial strategy — 'a win-win situation.' He reminded investors that 'rules of origin' require goods to be sufficiently transformed in Morocco to be exported tariff-free to the EU. Junjie Cai of APG argued that European, Moroccan and Chinese firms can all share the benefits, with components produced near European factories at competitive prices.
The broader stakes are big. China is positioned to build out an integrated supply chain inside Morocco — from phosphate processing for batteries through factories to port links — raising the country's strategic importance for both Beijing and Brussels. The European Commission's proposed Industrial Accelerator Act would restrict certain public procurement to European-content products; the European Association of Automotive Suppliers (Clepa) is lobbying for a tougher crackdown on subsidy circumvention. The looming test is whether the EU will classify Morocco as 'European' enough to qualify — a small piece of legal language with potentially enormous consequences for where the next generation of electric cars actually gets built.
A 500-hectare patch of Moroccan farmland near Tangier has become the front line of a brewing trade war — and Brussels is increasingly convinced China is using it to sneak past Europe's tariff wall.
Outside Tangier, dozens of Chinese auto-parts and battery firms are racing to build factories inside the Mohammed VI Tanger Tech City. They make tires, brakes, battery anodes — exactly the components Europe's electric-vehicle industry needs.
The problem for Brussels: Morocco has a free-trade deal with the EU, so goods made there can enter Europe tariff-free. Meanwhile, the EU has slapped tariffs of up to 45% on Chinese EVs. EU Trade Commissioner Maroš Šefčovič calls the Morocco workaround 'transshipment' and says it's becoming a 'big, big issue' for the European economy.
This isn't really about Morocco. It's about what economists call 'rules of origin' — the legal fine print that decides where a product is officially 'from' when it crosses borders. The question is how much of a car has to actually be made somewhere before that country can stamp it as its own.
If you'll ever buy an EV, work in manufacturing, or vote on industrial policy — this is your future. The EV transition is the biggest industrial reshuffle since the assembly line, and whoever controls the supply chain (especially batteries) controls trillions of dollars and millions of jobs. Europe is trying to keep its auto industry alive without choking off the cheap green tech consumers want. That contradiction will shape jobs, prices, and climate progress for the next decade.
Tariff dodging via third countries is an old story — Japan did it in the 1980s by building car plants in Tennessee; Vietnam plays this role today for some Chinese exports to the US. The new twist is that the EU is now drafting an 'Industrial Accelerator Act' to require European content in subsidised purchases, and watchdogs like Clepa are lobbying for tougher 'rules of origin.' Watch for two things: whether the EU classifies Morocco as 'European enough' to qualify, and whether other mid-sized economies (Mexico, Turkey, Indonesia) try the same playbook.