Why It Matters
The 2023 U.S.-Japan critical minerals agreement took effect immediately upon signature without congressional approval and changed neither U.S. law nor existing tariffs, according to a new Congressional Research Service (CRS) report.
The agreement covers cobalt, graphite, lithium, manganese and nickel, key inputs for electric vehicle (EV) batteries. Congress now faces questions about whether to authorize sectoral agreements of this kind, set negotiating objectives, and decide how to exercise oversight of the President's authority to negotiate with Japan on critical minerals.
Section 70502 of the One Big Beautiful Bill Act (P.L. 119-21) terminated the EV tax credit from Sept. 30, 2025.
The Big Picture
The United States has 14 congressionally approved comprehensive free trade agreements with 20 countries, however Japan is not among them, and the Trade Promotion Authority expired in 2021. During the first Trump administration, the United States and Japan signed the 2020 U.S.-Japan Trade Agreement, which reduced tariffs on some goods but not in the automotive or critical minerals sectors.
The Inflation Reduction Act of 2022 (P.L. 117-169) had provided consumers a tax credit of up to $7,500 for new EVs, with sourcing requirements tied to U.S. free trade agreement partners and restrictions on foreign entities of concern such as Russia and China.
In 2024, the U.S. Department of the Treasury designated the critical minerals agreement as a free trade agreement for purposes of that credit, drawing criticism from some members of Congress who said the designation overrode congressional trade authorities.
The U.S. ran a $48.5 billion deficit in vehicles and parts trade with Japan in 2025. Under Section 232 of the Trade Expansion Act of 1962, the Trump administration imposed a 15% tariff on Japanese automotive products, and as of July a 12.5% tariff applies to most Japanese goods.
Three bills address congressional oversight of these agreements:
- The Developing Overseas Mineral Investments and New Allied Networks for Critical Energies Act (H.R. 7037), sponsored by Rep. Young Kim (R-CA), would authorize the President to negotiate critical minerals agreements and set consultation requirements; it has passed the House.
- The STRATEGIC Minerals Act (S. 429), sponsored by Sen. Todd Young (R-IN), was introduced and referred to the Senate Committee on Finance on Feb. 5, 2025. Some members have asserted that Congress should authorize and approve sectoral agreements like those covering critical minerals, citing S. 429 as an example.
- The Intergovernmental Critical Minerals Task Force Act (S. 823), sponsored by Sen. Gary C. Peters (D-MI), and its House companion H.R. 3198, sponsored by Rep. Jay Obernolte (R-CA), would involve allies including Japan in reducing U.S. reliance on Chinese critical minerals supply chains; both remain introduced.
The Bottom Line
H.R. 7037 passed the House on June 8 and awaits action by the Senate Committee on Foreign Relations; no floor vote has been scheduled.
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