Japanese Prime Minister Sanae Takaichi and US President Donald Trump are expected to sign an action plan during their summit on March 19 to pave the way for a trade agreement expanding procurement of critical minerals, Kyodo News reported, citing diplomatic sources.
The action plan aims to reduce dependence on Chinese supply chains and increase tariffs on critical minerals from China, according to the report. Japan and the US would lead efforts to establish a new supply system through the Group of Seven and like-minded countries.
Sources said the plan would propose policy measures to diversify procurement sources, including imposing additional tariffs to prevent excessive inflow of Chinese minerals, while providing subsidies to encourage companies to invest and expand production outside China.
China currently accounts for about 70 percent of global rare earth production and over 90 percent of refining capacity. The price gap between Chinese and non-Chinese products, driven by lower wages and looser environmental regulations in China, poses a major challenge for Japan's supply chain shift, the report noted.
The G7 is moving to strengthen critical mineral supply chains, with the US Trade Representative's office considering pushing for trade agreements with Australia and other countries.
The summit may also discuss potential cooperation on rare earth development around Minamitorishima island in Tokyo's Ogasawara village.
