Japan joins the US green subsidy bonanza


Briefly: Japan and the US have reached a deal to boost cooperation on key minerals used in electric cars in a bid to reduce dependence on China. The agreement will allow electric vehicles (EVs) with metals collected or processed in Japan to benefit from massive US green subsidies.

A win-win: The incentives for Japan are clear: free subsidies courtesy of Uncle Sam. But what does the US get out of this?

  1. 🤝Resolving a trade dispute with an ally

Washington’s massive green subsidies package last year gave a competitive advantage to the US and its free trade partners. But a frustrated Japan (lacking a US free trade deal) was left out. The EU was likewise peeved.

So this latest pact brings Japan into America’s green subsidy tent, and removes a real irritant with a close ally. The US and the EU are working on a similar deal.

  1. 💪 Diluting China’s green tech dominance

China’s dominance of critical mineral supply chains, plus battery and solar production, means it’s also well placed to dominate downstream sectors like EVs. And it’s hard for any other single country to compete with China on scale.

So the US and its partners are pooling their strengths in the hope their green industries can thrive together, rather than wither alone.

Intrigue’s take: One other thing comes to mind here: the US knows it needs to ink more meaningful trade deals to compete with China’s influence. But after decades of economic disruption, US voters don’t really like trade deals right now.

So Biden may have found a loophole: mini-deals (like the Japan-US one above) help the US compete with China, without the need for congressional approval. Of course, his decision to bypass Congress still drew a sharp rebuke (from Congress).

Also worth noting:

Latest Author Articles
Why the Pacific is full of warships right now

July is peak travel season, and not just for school friends you haven’t seen since graduation but who are now flooding your feed with ‘candid’ snaps in their Santorini whites. But also for warships heading to the Pacific for naval exercises. 

18 July, 2024
The 3 big questions from the latest North Korean diplomat’s defection

South Korea’s lead spy agency confirmed yesterday (Tuesday) that a senior North Korean diplomat based in Cuba actually defected to the South last November, marking the most high-profile such defection since 2016.

17 July, 2024
The geopolitics of UEFA football

With Europe’s UEFA men’s football (sorry, ‘soccer’) championship final happening this Sunday, what better time to have a look at the geopolitics of it all?

11 July, 2024
Why banks are closely following record-breaking Hurricane Beryl

With winds reaching 165 mph, Hurricane Beryl made landfall in Grenada and St Vincent on Monday and was upgraded to a Category 5 storm yesterday. 5 is the highest rating on the Saffir-Simpson Hurricane Wind Scale, which is used to estimate potential property damage.

3 July, 2024