In the early days of his presidency, Donald Trump made clear he would do whatever it took to dismantle environmental policy and regulations that were put in place in the aftermath of the 2008 financial crisis. But over time Trump’s stance on climate change has gradually shifted, culminating in his recent decision to withdraw from the Paris Agreement. In this way, trade policy has become more pivotal in shaping U.S.-foreign relations than any of Trump’s blustering tirades about “building a wall” or renegotiating trade deals ever could be.
However, the act has also been met with challenges. For one, it does not specify how much of a mineral’s value must be derived from domestic production to qualify for the credit. Additionally, there are concerns that some minerals may not be readily available in sufficient quantities domestically to meet requirements. In response to those challenges, lawmakers are currently working on amendments to address them.
It has been widely rumored that the Trump administration is championing a new law that would allow for the production of domestically made minerals, in an attempt to break China’s monopoly on many parts of the mineral market. The proposed loophole in this proposed law would allow for materials to be sourced from countries with which the U.S. has free trade agreements- opening up avenues for American suppliers to compete with those from China and other countries, without having to worry about reliance on foreign reserves or access to specific markets. While there is still much speculation surrounding this potential proposal, if enacted it could have a large impact on American industry and potentially put more Americans back to work.
The US and Japan reached a trade deal on Monday encompassing cobalt, graphite, lithium, manganese and nickel – all minerals that are key components ofEV batteries. The agreement opens up both markets to new supplies of the minerals, allowing battery manufacturers and automakers to benefit from the IRA’s minerals requirement.
Lately, Japan has been seen as a leader in the field of nuclear disarmament. This is due to the country’s success in negotiating a new agreement with the United States following their dispute over the International Renewable Energy Agency (IRAA). The EU has also expressed interest in negotiating an agreement with the U.S., but it is unclear if they will be successful. Although all three countries have different reasons for wanting to reach an agreement, it appears that they will all eventually succeed.
The global landscape for critical minerals and battery manufacturing has changed rapidly in the seven months or so since the IRA was passed, introducing a potential stream of new free trade agreements. For founders and investors alike, that injects a fresh dose of uncertainty into the market. Though some manufacturers may benefit from ongoing tariff reductions, it remains to be seen which companies will be able to capitalize on these shifts and where disruptions could occur.
