Rare minerals and elements, such as lithium, are increasingly important to the clean energy industry, but the United States will face shortages of these essential materials for future demand for electric vehicles.
The agreement reached on Monday with Japan includes an obligation not to impose export duties on transporting crucial minerals to another country, according to a statement released by US Trade Representative Katherine Tai.
“The United States and Japan share a common interest in strengthening supply chains between like-minded partners and increasing resilience to threats such as economic sanctions,” he said.
Tai added that Washington continues to work with its partners and partners as chains through the Inflation Reduction Act (IRA).
The IRA is a huge help in the energy transition plan launched by President Joe Biden, who has consistently promoted “Made In America” with tax incentives for electric vehicles among other purchase measures.
The law requires that 40% of critical minerals for electric vehicle batteries be mined or processed in countries that have trade agreements with the United States, a threshold that must rise to 80% by 2027.
This rule excluded the European Union and Japan, but the agreement passed on Monday allows some of the subsidies that apply in the IRA law to critical minerals processed in the Asian country.
The European Union and the United States were also negotiating an agreement on this issue.
The Treasury Department will be required to rule on the requirements of the legislation on critical minerals and battery components by the end of the month.
Boosting the supply chain of these materials “promotes economic security and stability by ensuring that the United States and its allies and partners are not dependent on other countries for critical minerals,” a senior US administration official said on condition of anonymity.
The agreement covers the five critical minerals most needed for electric vehicle batteries, and will be reviewed again every two years.
