, the US and Japan signed a new trade deal this week that will benefit both sides when it comes to electric vehicles. It will allow Japanese carmakers to get access to at least a portion of the newly revamped $7,500 US federal EV tax credit. The deal should also reduce Japan's dependence on China.
For an electric car to qualify for the full $7,500 credit, the vehicle and its battery must be assembled in the US. The second half of the credit is based on where the battery's critical materials come from. An EV would need to have at least 40% of those materials come from the US or a country with a free trade agreement with the US.
US Trade Representative Katherine Tai signed the deal, sharing that Japan is one of our country's most trusted partners. However, she reportedly didn't have the backing of her colleagues in Congress ahead of the signing.Senate Finance Committee Chairman Ron Wyden and House of Representatives Ways and Means Committee Ranking Member Richard Neal are pushing back against the deal.