US, Japan strike EV battery minerals trade deal to reduce dependence on China

The United States and Japan have agreed on a trade deal to strengthen their battery supply chains and reduce their dependence on China on electric vehicle battery minerals.

The agreement will also give Japanese automakers easier access to the $7,500 US EV tax credit.

It also prohibits the two countries from enacting bilateral export restrictions on the minerals, including lithium, nickel, cobalt, graphite, and manganese, which are most critical for EV batteries.

US and Japan are collaborating to combat “non-market policies and practices” of other countries in the sector and on conducting investment reviews of foreign investments in their critical minerals supply chains.

Minerals-focused trade deals are one way the US will open access for trusted allies to the $7,500 per vehicle EV tax credits in last year’s climate-focused Inflation Reduction Act.

The two countries agreed to review the minerals agreement every two years, including whether it is appropriate to terminate or amend it.