The most recent EV tax credits from the Biden administration, in case it isn’t common knowledge yet, award the building, assembling and developing of EVs on American soil. It also rewards manufacturers for using batteries (or their materials) from countries that have a free-trade pact with the US. It’s such a valuable deal, that even companies like Audi are considering moving production into the states.
It sounds great, and for many manufacturers it is – but it leaves out one of America’s most important automotive partners: Japan.
Japan, unlike its neighbor South Korea, does not have a free-trade pact with the U.S. This excludes the island country from reaping the benefits of making and importing its products. Which, in layman’s terms, means that the likes of Honda, Toyota, Nissan, Subaru and Mitsubishi get to watch their neighbors bask in their tax credits while they don’t.
Japan’s government pleaded with the U.S. to rethink their terms to include Japan, being sure to mention their dedicated ally status to America since World War II ended. Even today, Japan stands as America’s top ally in Asia. Japan still hosts several U.S. military bases, which house over 50,000 soldiers.
The letter to the US government said, “Taking into consideration the objective to work with allies and like-minded partners to establish resilient supply chains, allies including Japan should be accorded treatment no less favorable than countries in the North America region.”
If not, Japan warns, they’ll have to rethink supplying the states with their products. Which would do a lot more harm to Japan than good, considering that the U.S. is their biggest market. Though, it does show just how betrayed our Pacific friend feels about the new deal.