The U.S. struck a trade deal with Japan that allows minerals used to make electric-vehicle batteries to be sourced from the island nation.

Multiple Asian and European countries have criticized geographic restrictions on EV battery sourcing to North America in order for vehicles to qualify for federal tax credits. The Biden administration instituted the restrictions in order to help the U.S. become more independent from Asian suppliers, particularly China.

The pact with Japan allows it to meet U.S. EV battery sourcing requirements included in the Inflation Reduction Act passed last year. Both countries agreed to forgo export taxes on minerals used to make the batteries.

The U.S. is in the process of negotiating a similar deal with the European Union.

China currently has a corner on the market for many of the minerals used to make EV batteries, and the Biden administration has undertaken multiple steps to build domestic sourcing of the materialsv in order to wean the U.S. off that supply chain.

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