(Bloomberg) -- US Vice President Kamala Harris vowed to work with South Korea to resolve a trade dispute stemming from the Inflation Reduction Act, as the longtime allies reaffirmed their defense ties in the Indo-Pacific theater. 

Harris, who is visiting Tokyo to attend former Japanese leader Shinzo Abe’s funeral, told South Korean Prime Minister Han Duck-soo Tuesday that she “understood” his countries concerns about tax incentives for electric vehicles under the law, according to a US readout. “They pledged to continue to consult as the law is implemented,” it added.

The comments come just weeks after South Korea strongly protested the Inflation Reduction Act signed last month by President Joe Biden. Provisions including tax credits of as much as $7,500 for purchases of electric vehicles made in North America threaten to disadvantage major South Korean brands like Hyundai and Kia. 

The US law requires carmakers to assemble their EVs in North America to receive subsidies, but Hyundai Motor Co. doesn’t yet have any operational electric car plants there. All three of South Korea’s main battery makers -- LG Energy Solution Ltd., SK On Co. and Samsung SDI Co. -- import most of their critical minerals from China, another obstacle in the law for the nation’s automakers.

The disadvantage risks hurting Hyundai’s performance in the US, where this year it’s second in EV market share after Tesla Inc. South Korea invested $27.6 billion to the US last year, and Hyundai is planning to spend $5.5 billion building EV and battery facilities in Georgia. 

The friction risks Biden’s efforts to build a tighter network of partners to counter China’s rising influence. South Korea is key in initiatives such as the Indo-Pacific Economic Framework and the so-called Chip 4 Alliance of major semiconductor manufacturing nations. The EV dispute has clouded Yoon’s campaign promise to bolster ties with the US on economic issues, as well as security. 

In the meeting, the allies agreed to worked together for the establishment of “peace, stability, and prosperity in the Indo-Pacific and around the world,” the statement said. “United States’ commitment to our defense relationship and welcomed steps to broaden the alliance to take on the defining challenges of our time.”

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