US wants to create a critical minerals trading bloc with its allies to counter China

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WASHINGTON (AP) — The Trump administration announced Wednesday that it wants to create a critical minerals trading bloc with its allies and partners, using tariffs to maintain minimum prices and defend against China’s stranglehold on the key elements needed for everything from fighter jets to smartphones.

Vice President JD Vance said the U.S.-China trade war over the past year exposed how dependent most countries are on the critical minerals that Beijing largely dominates, so collective action is needed now to give the West self-reliance.

“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 the opening of a meeting that Secretary of State Marco Rubio hosted with officials from several dozen European, Asian and African nations.

The Republican administration is making bold moves to shore up supplies of critical minerals needed for electric vehicles, missiles and other high-tech products after China choked off their flow in response to President Donald Trump’s sweeping tariffs last year. While the two global powers reached a truce to pull back on the high import taxes and stepped-up rare earth restrictions, China’s limits remain tighter than they were before Trump took office.

The critical minerals meeting comes at a time of significant tensions between Washington and major allies over President Donald Trump’s territorial ambitions, including Greenland, and his moves to exert control over Venezuela and other nations. His bellicose and insulting rhetoric directed at U.S. partners has led to frustration and anger.

The conference, however, is an indication that the United States is seeking to build relationships when it comes to issues it deems key national security priorities.

While major allies like France and the United Kingdom attended the meeting in Washington, Greenland and Denmark, the NATO ally with oversight of the mineral-rich Arctic island, did not.

Vance said some countries have signed on to the trading bloc, which is designed to ensure stable prices and will provide members access to financing and the critical minerals. Administration officials said the plan will help the West move beyond complaining about the problem of access to critical minerals to actually solving it.

“Everyone here has a role to play, and that’s why we’re so grateful for you coming and being a part of this gathering that I hope will lead to not just more gatherings, but action,” Rubio said.

Vance said that for too long, China has used the tactic of unloading materials at cheap prices to undermine potential competitors, then ratcheting up prices later after keeping new mines from being built in other countries.

Prices within the preferential trade zone will remain consistent over time, the vice president said.

“Our goal within that zone is to create diverse centers of production, stable investment conditions and supply chains that are immune to the kind of external disruptions that we’ve already talked about,” he said.

To make the new trading group work, it will be important to have ways to keep countries from buying cheap Chinese materials on the side and to encourage companies from getting the critical minerals they need from China, said Ian Lange, an economics professor who focuses on rare earths at the Colorado School of Mines.

“Let’s just say it’s standard economics or standard behavior. If I can cheat and get away with it, I will,” he said.

At least for defense contractors, Lange said the Pentagon can enforce where those companies get their critical minerals, but it may be harder with electric vehicle makers and other manufacturers.

Trump this week also announced Project Vault, a plan for a strategic U.S. stockpile of rare earth elements to be funded with a $10 billion loan from the U.S. Export-Import Bank and nearly $1.67 billion in private capital.

In addition, the government recently made its fourth direct investment in an American critical minerals producer, extending $1.6 billion to USA Rare Earth in exchange for stock and a repayment deal. The Pentagon has shelled out nearly $5 billion over the past year to spur mining.

The administration has prioritized the moves because China controls 70% of the world’s rare earths mining and 90% of the processing. Trump and Chinese President Xi Jinping spoke by phone Wednesday, including about trade. A social media post from Trump did not specifically mention critical minerals.

Heidi Crebo-Rediker, a senior fellow in the Center for Geoeconomic Studies at the Council on Foreign Relations, said the meeting was “the most ambitious multilateral gathering of the Trump administration.”

“The rocks are where the rocks are, so when it comes to securing supply chains for both defense and commercial industries, we need trusted partners,” she said.

Japan’s minister of state for foreign affairs, Iwao Horii, said Tokyo was fully on board with the U.S. initiative and would work with as many countries as possible to ensure its success.

“Critical minerals and (their) stable supply is indispensable to the sustainable development of the global economy,” he said.

The Export-Import Bank's board this week approved the largest loan in its history to help finance the setup of the U.S. Strategic Critical Minerals Reserve, which is tasked with ensuring access to critical minerals and related products for manufacturers.

The bank's president and chairman, John Jovanovic, told CNBC that manufacturers, which benefit the most from the reserve, are making a long-term financial commitment, while the government loan spurs private investments.

David Abraham, a rare earths expert who has followed the industry for decades and is author of “The Elements of Power,” said that while the Trump administration has focused on reinvigorating critical minerals production, it also is important to encourage development of manufacturing that will use those minerals.

He noted that Trump’s decisions to cut incentives for electric vehicles and wind turbines have undercut demand for these elements in America.