The United States agreed to boost cooperation with Japan on critical mineral supply chains and to expand access to tax breaks as U.S. President Joe Biden aims to counter China’s dominance of the electric vehicle battery sector.

Following the pact, EVs that use materials that have been collected or processed in Japan will be eligible for incentives under the U.S. Inflation Reduction Act, Japanese trade minister Yasutoshi Nishimura said Tuesday in Tokyo.

In a statement, U.S. Trade Representative Katherine Tai lauded Japan as "one of our most valued trading partners.”

"This announcement is proof of President Biden’s commitment to building resilient and secure supply chains,” Tai said.

The swiftly negotiated agreement prohibits the two countries from enacting bilateral export restrictions on the minerals most critical for EV batteries, according to senior Biden administration officials. The minerals include lithium, nickel, cobalt, graphite and manganese.

The deal also aims to reduce U.S.-Japanese dependence on China for such materials by requiring collaboration to combat "non-market policies and practices" of other countries in the sector and on conducting investment reviews of foreign investments in their critical minerals supply chains.

Minerals-focused trade deals are one way that the Biden administration hopes to open up access for trusted allies to the $7,500 per vehicle EV tax credits in last year's climate-focused IRA.

Half of the credit for purchasing consumers is reserved for North American-assembled vehicles and batteries, a source of considerable tension with the European Union, Japan and South Korea, who worry that their car and battery makers will be rendered uncompetitive.

The other half of the credit is contingent on at least 40% of the value of critical minerals in the battery having been extracted or processed in the United States or a country with a U.S. free trade agreement or recycled in North America.

Japan-based suppliers to the EV sector advanced in Tuesday trading in Tokyo. Sumitomo Metal Mining, a producer of battery cathode materials, rose as much as 2.1%, while separator manufacturer Asahi Kasei also gained.

The U.S. remains highly dependent on China and demand for critical minerals will be enormous in the years ahead, Treasury Secretary Janet Yellen said Friday during testimony in the House Ways and Means Committee.

"One of the goals of the IRA is to broadly strengthen supply chains for these critical minerals and their processing,” she said.

The Treasury Department is scheduled to put in place new requirements that will mandate battery components and critical minerals be sourced from free-trade agreement nations in order to get the full $7,500 per vehicle consumer tax credit. Though the EU and Japan are not part of any FTAs with the U.S., the new pacts would give the allies the same status for critical minerals trade.

"Securing critical minerals, which are necessary for electric vehicles, is an important issue to tackle as demand for these cars is expected to exponentially increase,” Nishimura told reporters. Tai and Japanese ambassador to the U.S. Koji Tomita were scheduled to sign an agreement later Tuesday, he said.

U.S. legislators have recently questioned both Tai and Yellen on the legitimacy of such deals without congressional approval. Meanwhile, several labor unions, which are a key base of support for Biden, have pushed back against the agreements over concerns they risk American jobs.

Lawmakers had been consulted on the deal, but it was negotiated under the USTR’s authority to reach agreements on specific sectors without the approval of Congress, senior administration officials said in background call with reporters.

The pact contains a screening mechanism to ensure that critical minerals coming from "countries of concern” — which refers to China and Russia — don’t benefit from the IRA incentives, the officials said.