The trade agreement was signed by Katherine Tai, US trade representative and Koji Tomita, Japanese ambassador to the US. Both the countries have reached an agreement over critical minerals that are required for electric vehicles. The signing of agreement happens just before EV announcement of EV tax credit.
The trade agreement could make Japanese electric vehicle manufacturers qualify for the tax break that could be up to $7,500. Currently the electric vehicle supply chain is mostly dependable on China particularly for batteries and other EV components. With this agreement, the US and its allies starting with Japan would be looking to develop their own supply chain in order to reduce the dependency on China. Some of the critical minerals for electric vehicle include lithium, nickel, cobalt, manganese and graphite.
In a statement Katherine Tai said, ““proof of President Biden’s commitment to building resilient and secure supply chains.” She further added, “Japan is one of our most valued trading partners and this agreement will enable us to deepen our existing bilateral relationship.”
The office of Tomita Koji, Japanese Ambassador to the US said in a press release “Facing the prospect of significant increase in demand of electric vehicle batteries, it is urgent to secure critical minerals which are essential to the production of clean vehicles.” Adding further, “The Agreement is envisaged to build robust supply chains through coordination between Japan and the U.S. and among like-minded countries with strengthened cooperation for ensuring sustainable and equitable supply chains for such critical minerals, including to promote the goals of the Inflation Reduction Act.”
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