Execs worry a quirk in the Inflation Reduction Act could allow nickel powerhouse Indonesia to qualify for tax incentives, making it almost impossible for North American companies to compete
Last month, Republican congressman Pete Stauber of Minnesota penned a pointed letter to United States Trade Representative Katherine Tai before she embarked on a trip to Asia.
“I write to express concern over recent comments by Indonesian government officials that the country is seeking to enter a limited free trade agreement with the U.S., to increase trade of critical minerals needed for EV batteries and other renewable technologies,” Stauber said in the letter, dated April 14.
Stauber’s intervention added to a growing battle — mostly happening behind the scenes — in Washington, D.C., about how to interpret a clause in the U.S. Inflation Reduction Act (IRA) that provides generous tax incentives for electric vehicles, provided most of the inputs were sourced from countries with which the United States has a free trade agreement.
In March, the Treasury Department offered some guidance on how this will apply to the minerals used in batteries. But there was still ambiguity. Will the US$3,750 tax incentive apply if the minerals were extracted from a friendly country, but processed in a place that lacks preferential trade status?
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