Key insights
- Japan is initiating trade talks with Mercosur to diversify oil sources and critical mineral supplies, aiming to reduce reliance on the Middle East and China. While this signals a long-term shift in supply chains, the immediate impact on U.S. equities is limited. The move reflects broader concerns about geopolitical risks and supply chain vulnerabilities, potentially influencing global trade dynamics.
May 26 (Reuters) - Japan is set to begin talks with South American trade bloc Mercosur on an economic partnership to seek alternative oil sources, critical minerals and lower auto tariffs, the Nikkei newspaper reported on Tuesday.
Japan also plans to wrap up talks with other members of Mercosur - Brazil, Argentina, Uruguay, Paraguay and Bolivia - Nikkei said.
Japan’s push to secure oil from outside the Middle East comes as shipping disruptions in the Strait of Hormuz threaten the net oil importing nation’s economy.
The country, alongside other Western nations, is also looking to reduce reliance on rare earths from China, a market that Beijing overwhelmingly dominates.