Japan and the US reach agreement on critical minerals

Japan and the United States have reached an agreement on trade in critical minerals for electric vehicle batteries, part of an effort to ensure secure supplies of strategically important resources.  

The deal is expected to help electric vehicles using metals processed in Japan qualify for tax incentives under President Joe Biden’s Inflation Reduction Act.  

The Act includes a tax credit of up to $7,500 that could be used to purchase an electric vehicle but requires such vehicles to have a portion of the critical minerals used in their batteries to be mined in or processed domestically or from countries with which the U.S. has free trade agreements. Japan and the U.S. have no such FTA. 

Japanese officials have said that the deal will grant Japan the same treatment as an FTA partner regarding such minerals. 

The agreement to not impose export duties on trade in lithium, cobalt, manganese, nickel and graphite is a great step forward for Japanese automakers and companies like Panasonic. 

“As we expect a significant increase of demand for EV batteries going forward, securing critical minerals indispensable for their production is a pressing task,” Foreign Minister Yoshimasa Hayashi told reporters.  

“The deal is aimed at establishing resilient supply chains through cooperation between Japan and the United States, as well as like-minded countries, by strengthening cooperation to secure sustainable and fair supply chains for those critical minerals,” he said.  

“This announcement is proof of President Biden’s commitment to building resilient and secure supply chains,” U.S. Trade Representative Katherine Tai said in a statement.  

Tai said the U.S. “would continue to work with our allies and partners to strengthen supply chains for critical minerals, including through the Inflation Reduction Act.”