U.S., Japan strike trade deal on EV battery minerals

Japan was working with the U.S. to sign the agreement in Washington on Tuesday, trade minister Yasutoshi Nishimura told reporters in Tokyo.

“As the demand for electric vehicle batteries is expected to grow significantly, securing important minerals essential for their production is an urgent issue,” Nishimura said.

The U.S. Treasury is expected to define sourcing requirements for the EV tax subsidies by the end of this week, providing eagerly awaited guidance to the auto, battery and clean energy sectors.

But asked whether the trade agreement would qualify Japan-sourced batteries, components and vehicles for that part of the tax credit, the officials said that determination was up to Treasury.

Nishimura said that EVs made with minerals mined or processed in Japan were expected to meet tax exemption requirements under the U.S. act.

The U.S. officials said that the U.S. Trade Representative does not intend to seek approval by Congress for the minerals trade agreement because it falls under the agency’s authority to negotiate sectoral trade agreements at the executive level.

But they said provisions in the deal to promote labor rights and recycling in their battery mineral supply chains would help both countries.

“Japan is one of our most valued trading partners and this agreement will enable us to deepen our existing bilateral relationship,” U.S. Trade Representative Katherine Tai said in a statement.

“This is a welcome moment as the United States continues to work with our allies and partners to strengthen supply chains for critical minerals, including through the 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.