On August 18, the Biden Administration announced that a Commerce Department investigation found Chinese companies are selling solar products through four South East Asian countries, including Cambodia, Malaysia, Thailand, and Vietnam, in order to evade Obama-era tariffs on Chinese goods. The determination requires new import duties on imports from the four countries. It follows a failed bipartisan effort by the U.S. House of Representatives in May to override President Biden’s veto to lift his administration’s two-year solar tariff moratorium. Commerce identified five primary companies circumventing the tariffs: BYD, Canadian Solar, New East Solar, Trina Solar, and Vina Solar.

Why it matters: The tariff dispute represents the continuing balancing act for the Biden Administration, Congress, and solar industry stakeholders as they look to strengthen U.S. solar energy manufacturing and use. Congress, including members from President Biden’s party, have expressed concern that possible tariff carveouts from the Commerce Department could enable Chinese solar companies to benefit from IRA tax credits, specifically from solar wafers produced outside of China but with Chinese-sourced polysilicon. Competitors of the Chinese firms have called for new solar tariffs, while the CEO of the Solar Energy Industries Association—which includes not only manufacturers, but also utilities and developers, for whom tariffs increase costs—released a statement warning that new import duties could impede growth of the U.S.’s solar industry.

Many see the four ASEAN states as important partners in shifting supply chains away from China, but the Commerce Department’s determination highlights China’s dominance of solar PV supply chains and the challenges in creating alternatives. Cambodia, Malaysia, Thailand, and Vietnam accounted for approximately 80% of U.S. solar PV module imports in the first quarter of 2023, according to data from a subsidiary of S&P Global, with Vietnam alone providing 30% of U.S. solar imports.

A new report by Petroleum Economist found that Vietnam and the Philippines will lead LNG import capacity growth as Indonesia and Thailand, the second and third largest LNG exporters in Southeast Asia, curtail exports to increase their energy security. Both the Philippines and Vietnam received their first LNG cargos in 2023 after opening their import terminals. The report estimates the two countries will account for approximately 30.4 bcm of new LNG capacity from now to 2023.

On August 29, the White House announced President Biden would visit Vietnam on September 10, after participating in the G20 summit in India.

Why it matters: Some argue that natural gas is a ‘transition’ fuel for countries seeking to reduce emissions from coal-fired power but urge its eventual abandonment in favor of renewable energy. But this is not so simple for governments in developing countries—unlike developed economies, they often must contend with rapid electricity demand growth and insufficient investment, meaning that they are not easily able to shut down existing generating assets simply to replace them with more desirable power.

In part for political reasons, including internal differences in perspective, the Biden administration has had a complex attitude toward LNG projects in Southeast Asia. Mr. Biden and Energy Secretary Jennifer Granholm have defended U.S. LNG exports where they replace coal or improve allies’ immediate energy security. Conversely, climate envoy John Kerry has argued that new natural gas projects don’t make sense because by the time investors have earned back their investments, natural gas should no longer be used in power generation. The fact that governments in Vietnam and the Philippines are placing long-term bets on LNG is indicative of their pragmatic approaches to meeting national energy needs. Surging U.S. LNG exports suggest that the Biden administration has adopted a quiet pragmatism on this issue as well, as U.S. officials work to help Europe replace past pipeline gas imports from Russia while mitigating market impacts elsewhere.

Stepping back from the administration’s climate goals to its overarching geopolitical priorities, U.S. LNG exports can be a valuable component of America’s deepening relationships with key ASEAN member-states, including both the Philippines and Vietnam. The United States and the Philippines recently launched a bilateral “Energy Policy Dialogue” to advance cooperation on decarbonizing their economies and strengthening energy security—a conversation almost certain to include LNG. In 2021, refined oil products was the country’s second largest source of imports at $9 billion, with 36% of which came from China (the U.S.’s share was under 1%). The United States and Vietnam held their fourth Energy Security Dialogue in 2022 and launched Vietnam’s Just Energy Transition Partnership with the International Partners Group in December last year. Notably, Vietnam recently elevated the U.S. to its “top tier” diplomatic ranking alongside China and Russia as U.S. policymakers may seek to leverage the country’s manufacturing and rare earths potential as Washington “de-risks” its deep economic relationship with Beijing.

In mid-August, Hyundai and LG said they would invest an additional $2 billion in а battery plant already under construction in Georgia. Expanding on previous commitments, the two firms now plan to invest over $7.5 billion in the Georgia plant. They expect the site to produce 300,000 EVs annually, starting in 2025, and up to 500,000 in the future. Around the same time, Ford and its South Korean partners EcoProBm and Sk On announced they will construct a $887 million EV battery manufacturing plant in Quebec.

Why it matters: Based on investment data from the BlueGreen Alliance Foundation, Korean automobile companies and battery makers have publicly announced over $21 billion in investment in American EV manufacturing since the IRA’s passage in August 2022, making Korean companies the largest source of foreign investment in the sector. Some investment appears to be “spilling over” into Canada and Mexico as well—the IRA’s EV tax credit rules grant eligibility when battery components are manufactured in North America. Indeed, Sk On’s investment in Canada comes three months after South Korean President Yoon Suk Yeol and Canadian Prime Minister Justin Trudeau signed a Memorandum of Understanding to further the two countries’ cooperation on critical mineral supply chains and energy security. Nuevo León’s governor said Korean car manufacturer Kia is preparing plans for a new EV factory worth up to $1 billion.

Increased investment and supply chain cooperation among South Korea, the United States, Canada, and Mexico could benefit all. Canada’s critical mineral mining sector is overall more robust than its American counterpart thanks to years of coordination between policymakers and industry, most recently shown in Canada’s Critical Minerals Strategy released in December 2022, and could ease forecast battery material woes. South Korea has taken advantage of Mexico’s lower labor costs and was Mexico’s fourth largest exporter in 2021; nearly 10% of Korea’s exports were motor vehicles or parts. Moving larger segments of U.S. EV supply chains to this side of the Pacific boosts their physical security too.

Auto manufacturing has long been on the leading edge of North American economic integration, a dynamic that the IRA’s EV tax credit rules seem set to reinforce. One key task for U.S. policymakers is to avoid reinforcing earlier political dynamics surrounding the foundation of this relationship, the trade deal formerly known as NAFTA, renegotiated and renamed by then-president Donald Trump.

In August, representatives from Japan’s Ministry of Economy, Trade, and Industry (METI) secured critical minerals deals with five African countries: Angola, the Democratic Republic of the Congo (DRC), Madagascar, Namibia, and Zambia. The deals ranged from rare earths exploration agreements (Namibia), increased trade cooperation (Angola), mineral exploration of cobalt, lithium, and copper (DRC and Madagascar), and increased mining sector cooperation (Zambia).

METI finalized the deals as Japan’s Prime Minister Fumio Kishida met President Joe Biden and South Korea’s President Yoon Suk Yeol for trilateral talks at Camp David. In a press release from the White House, the three governments committed to deepening cooperation to mitigate supply chain disruptions to important commodities and industries, such as critical minerals or batteries.

Why it matters: Like many countries, Japan needs secure new sources of critical minerals to support its clean energy technology industries in an increasingly competitive global market. The process has become a self-reinforcing one in which the U.S. and key allies like Japan diversify supply chains away from China, and impose other trade restrictions, and Beijing responds with its own measures, such as recent export controls on gallium and germanium, two critical minerals used in civilian and military high-tech products.

The five African states partnering with Japan could become a meaningful source of critical minerals for Japanese industries; the DRC produced nearly 60% of the world’s lithium in 2022, for example, and U.S. Geological Survey estimates suggest the DRC and Namibia hold approximately 3.2 million tons of lithium, while the DRC and Zambia are believed to hold the majority of the 25 million tons of “terrestrial” cobalt reserves. Yet the decade-plus discovery and production process for critical minerals extraction could blunt these partnerships’ immediate impact. After signing a critical minerals agreement with the U.S. to obtain eligibility for IRA electric vehicle tax credits, Japan will look to leverage its new mining agreements to supply its significant clean energy technology processing and manufacturing capacity—and to improve competitiveness of products eligible for U.S. tax credits relative to goods produced by firms unable to capture the credits.