The Trump administration wants to create a critical minerals trading bloc with its allies that will use tariffs to maintain price floors and defend against China’s tactic of flooding the market to undermine any potential competitors.
Vice President JD Vance said Wednesday that the trade war over the past year exposed how dependent most countries are on the critical minerals that China has a stranglehold on.
“We want members to form a trading bloc among allies and partners, one that guarantees American access to American industrial might while also expanding production across the entire zone,” Vance said at a meeting of foreign ministers at the State Department.
“What is before all of us is an opportunity at self-reliance that we never have to rely on anybody else except for each other, for the critical minerals necessary to sustain our industries and to sustain growth.”
Critical minerals are needed for everything from jet engines to smartphones. China dominates the market for those ingredients crucial to high-tech products.
“I think a lot of us have learned the hard way in some ways over the last year, how much our economies depend on these critical minerals,” Vance said at the opening of a meeting that Secretary of State Marco Rubio is hosting with officials from several dozen European, Asian and African nations.
Two days ago, President Donald Trump announced Project Vault, a plan for stockpile of rare elements to be funded with a $10 billion loan from the U.S. Export-Import Bank and nearly $1.67 billion in private capital.
Trump’s Republican administration is making such bold moves after China, which controls 70% of the world’s rare earths mining and 90% of the processing, choked off the flow of the elements in response to Trump’s tariff war. The two superpowers are in a one-year truce after Trump and Chinese President Xi Jinping met in October and agreed to pull back on high tariffs and stepped-up rare earth restrictions.
But China’s limits remain tighter than they were before Trump took office.
“We don’t want to ever go through what we went through a year ago,” Trump said on Monday when announcing Project Vault.
Countering China’s dominance on critical minerals
Other countries might join with the Trump administration in buying up critical minerals and taking other steps to spur industry development because the trade war revealed how vulnerable Western countries are to China, said Pini Althaus, who founded Oklahoma rare earth miner USA Rare Earth in 2019.
The government last week also made its fourth direct investment in an American critical minerals producer when it extended $1.6 billion to USA Rare Earth in exchange for stock and a repayment agreement.
Seeking government funding these days is like meeting with private equity investors because officials are scrutinizing companies to ensure anyone they invest in can deliver, Althaus said. And the government is demanding terms designed to generate a return for taxpayers as loans are repaid and stock prices increase, he said.
The stockpile strategy
Meanwhile, the U.S. Export-Import Bank’s board this week approved the $10 billion loan — the largest in its history — to help finance the setup of the U.S. Strategic Critical Minerals Reserve. It is tasked with ensuring access to critical minerals and related products for manufacturers, including battery maker Clarios, energy equipment manufacturer GE Vernova, d