US and Japan sign trade deal on metals for electric vehicle batteries

The United States and Japan have signed a trade deal on metals for electric vehicle batteries, an agreement that is important for strengthening their battery supply chains and gives Japanese automakers broader access to a tax credit of up to 7500 USD (165.000 Kč) for buying an electric vehicle in the US. Reuters reported.

According to officials in US President Joe Biden’s administration, the swiftly negotiated deal bars both countries from imposing reciprocal export restrictions on the minerals most important for electric vehicle batteries. The restrictions cover lithium, nickel, cobalt, graphite and manganese.

The deal is also intended to reduce the US and Japan’s dependence on China as a supplier of these metals. It requires cooperation to tackle “non-market policies and practices” in other countries in the sector, and to carry out reviews of foreign investment in their critical minerals supply chains.

Trade deals focused on minerals are one way the Biden administration says it can give trusted allies access to the electric vehicle tax credits approved under last year’s Inflation Reduction Act. Half of the credits are reserved for vehicles and batteries made in North America, a source of tension with the EU, Japan and South Korea. They fear their automakers and battery manufacturers will be unable to compete. The other half is conditional on at least 40 percent of the critical minerals in batteries being extracted or processed in the US or a country that has a free trade agreement with the US, or recycled in North America.