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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\u2019s tactic of flooding the market to undermine any potential competitors.<\/p>\n
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.<\/p>\n
\u201cWe 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,\u201d Vance said at a meeting of foreign ministers at the State Department.<\/p>\n
\u201cWhat 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.\u201d<\/p>\n
Critical minerals\u00a0are needed for everything from jet engines to smartphones.\u00a0China\u00a0dominates the market for those ingredients crucial to high-tech products.<\/p>\n
\u201cI 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,\u201d 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.<\/p>\n
Two days ago, President Donald Trump announced Project Vault, a plan for\u00a0stockpile of rare elements\u00a0to be funded with a $10 billion loan from the U.S. Export-Import Bank and nearly $1.67 billion in private capital.<\/p>\n
Trump\u2019s Republican administration is making such bold moves after China, which controls 70% of the world\u2019s rare earths mining and 90% of the processing, choked off the flow of the elements in response to\u00a0Trump\u2019s tariff war. The two superpowers are in a one-year truce after Trump and Chinese President Xi Jinping\u00a0met in October\u00a0and agreed to\u00a0pull back on high tariffs\u00a0and stepped-up rare earth restrictions.<\/p>\n
But China\u2019s limits remain tighter than they were before Trump took office.<\/p>\n
\u201cWe don\u2019t want to ever go through what we went through a year ago,\u201d Trump said on Monday when announcing Project Vault.<\/p>\n
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\u00a0Oklahoma rare earth miner USA Rare Earth\u00a0in 2019.<\/p>\n
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.<\/p>\n
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.<\/p>\n
Meanwhile, the U.S. Export-Import Bank\u2019s board this week approved the $10 billion loan \u2014 the largest in its history \u2014 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, digital storage company Western Digital and aerospace giant Boeing, according to the policy bank.<\/p>\n
Bank President and Chairman John Jovanovic told CNBC that the project creates a public-private partnership formula that \u201cis uniquely suited and puts America\u2019s best foot forward.\u201d<\/p>\n
\u201cWhat it does is it creates a scenario where there are no free riders. Everybody pitches in to solve this huge problem,\u201d he said.<\/p>\n
Manufacturers, which benefit the most from the reserve, are making a long-term financial commitment, Jovanovic said, while the government loan spurs private investments.<\/p>\n
The stockpile strategy may help spark a \u201cmore organic\u201d pricing model that excludes China, which has used its dominance to flood the market with lower-priced products to squeeze out competitors, said Wade Senti, president of the U.S. permanent magnet company AML.<\/p>\n
The Trump administration also has injected public money directly into the sector. The Pentagon has\u00a0shelled out nearly $5 billion\u00a0over the past year to help ensure its access to the materials after the trade war laid bare just how beholden the U.S. is to China.<\/p>\n
A bipartisan group of lawmakers last month proposed creating a new agency with $2.5 billion to spur production of rare earths and the other\u00a0critical minerals. The lawmakers applauded the steps by the Trump administration.<\/p>\n
\u201cIt\u2019s a clear sign that there is bipartisan support for securing a robust domestic supply of critical minerals that both reduces our reliance on China and stabilizes the market,\u201d Sens. Jeanne Shaheen, D-N.H., and Todd Young, R-Ind., said in a joint statement Tuesday.<\/p>\n
Building up a stockpile will help American companies weather future rare earth supply disruptions, but that will likely be a long-term effort because the materials are still scarce right now with China\u2019s restrictions, said David Abraham, a rare earths expert who has followed the industry for decades and wrote the book \u201cThe Elements of Power.\u201d<\/p>\n
The Trump administration has focused on reinvigorating critical minerals production, but Abraham said it\u2019s also important to encourage development of manufacturing that will use them. He noted that Trump\u2019s decisions to\u00a0cut incentives for electric vehicles\u00a0and wind turbines have undercut demand for these elements in America.<\/p>\n<\/div>\n
#Vance #appeals #allies #trading #bloc #Trumps #tariffs #place #secures #access #rare #earths<\/p>\n","protected":false},"excerpt":{"rendered":"
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