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
COP28 off to a solid start

Just as our co-founder Helen sets foot in Dubai, there’s a major breakthrough: after months of negotiations, nearly 200 nations have agreed on how to run a ‘loss and damage fund’ to help poorer countries weather the impacts of a changing climate.

1 December, 2023
India prepares to build a third aircraft carrier

India is set to add a third aircraft carrier worth $5B to its fleet, with its Defense Acquisition Council likely to clear the deal on Friday, according to Bloomberg.

29 November, 2023
North Korea scraps key military pact with the South

Following the launch of North Korea’s first spy satellite on Tuesday night, and South Korea’s resumption of border surveillance in response, the North scrapped a key military pact between the two neighbours yesterday (Thursday).

24 November, 2023
Did India try to assassinate a US citizen on US soil?

The US has thwarted a plot to assassinate a Sikh activist on American soil, and issued a warning to India over its possible involvement, according to the Financial Times.

23 November, 2023