U.S President Donald Trump and Japan Prime Minister Sanae Takaichi have signed a non-binding framework targeted at securing rare earth supply chains.
The framework is the latest step in the Trump Administration’s efforts to secure supply chains for rare earth elements and critical minerals that circumvent Chinese mined and refined material.
Rare earth elements are essential for a variety of everyday items, from phones to cars to computers, and are also critical components in virtually all modern military systems. China mines approximately 70% of the world’s rare earths, and is responsible for around 90% of the world’s rare earth refining capacity.
Onshoring rare earth production has been a priority for the Trump Administration. They took a 15% equity stake in rare earth miner MP Materials in July, a 5% stake in Lithium Americas in early October, and a 10% stake in Trilogy Metals, who mine copper and zinc, shortly after. Most recently, the U.S signed a highly similar rare earths framework agreement with Australia.
It is important to note that, like the framework signed with Japan, the Australian agreement is legally non-binding. These frameworks are not deals, they are documents between two parties stating that they intend on working together.
Along with the framework agreement came a joint list of Japanese and American companies and projects which they hope will receive increased support from the private sector. The document ended by saying both governments “express strong expectation for the advancement of various business efforts that contribute to strengthening supply chains”.
Companies mentioned on the list included Panasonic, Mitsubishi Electric, Toshiba, Westinghouse, and Softbank Group.
The framework compliments a deal made between the American and Japanese governments earlier this year that saw Japan pledge $550 million of investment and other forms of financial support to U.S companies in order to alleviate the pain of the Trump Administration’s sweeping import tariffs.
While in Tokyo, Trump also announced a deal to bring massive investment from Toyota to the United States, adding to what has been a news-filled excursion into the pacific. The most significant meeting of Trump’s trip, however, is yet to come.
Highly anticipated talks between Trump and Chinese president Xi Jinping are scheduled to occur on Thursday. The market tensely awaits the results of that meeting, with rumblings of a potential deal between the two causing the market to jump upward on Monday. Deal or no deal, the outcome of those talks is sure to draw a strong market reaction.
