Janet Yellen Expects EV Subsidy Rules to Prompt New Trade Deals

Treasury Secretary Janet Yellen said Japan and the European Union would need to negotiate new trade agreements with the U.S. to meet the mineral-sourcing requirements for an overhauled electric-vehicle tax subsidy.

As part of the 2022 Inflation Reduction Act, the U.S. revamped a tax credit for consumers who buy electric vehicles in hopes of reducing U.S. reliance on China. To qualify for the full $7,500 tax credit, among other requirements, 40% of the value of the minerals in an electric vehicle’s battery must come from a country that has a free-trade agreement with the U.S. That amount is set to rise to 80% after 2026.