The Trump administration is pursuing an array of unconventional measures to shore up mineral supplies that are vital for makers of cars, jet engines, weaponry and data centers, as the Chinese government leverages its control of rare earth exports in ways that could cripple global industry.
In recent months, the administration has taken stakes in several mining and minerals firms. It has talked of establishing a strategic reserve of rare earths, and supporting domestic producers with price controls and tariffs. On Monday, the United States announced a strategic agreement with Australia to invest billions of dollars to develop mineral supplies. The topic is expected to be on the agenda for a Group of 7 meeting in Canada at the end of the month.
Some analysts have praised the administration’s effort to find new approaches to reduce a dependence on China that has persisted through the terms of many U.S. presidents. But they have cautioned that the measures are not likely to provide a quick fix to a deep reliance on Chinese mineral supplies.
Constructing the mines, refineries and factories needed to provide a real alternative to Chinese supplies will likely take years — even if foreign producers can obtain the machinery and technology they need, which the Chinese government has also proposed controlling. These investments will also require substantial capital, creating the risk that some taxpayer funds will go to unproven companies that could fail.
China mines 70 percent of the world’s rare earths, and does chemical processing for 90 percent of the global supply. When the Trump administration recently hit the nation with high tariffs and more expansive technology controls, the Chinese government responded by rolling out a licensing system that would give it control over rare earths shipments even outside of China.
The restrictions would affect shipments of products containing as little as 0.1 percent Chinese-origin rare earths, as well as the use of Chinese mining and refining equipment and technology. The licensing system would also control battery technologies that are important for electric vehicles, drones and the data centers that power artificial intelligence.
Mr. Trump has threatened to impose an additional 100 percent tax on Chinese imports on Nov. 1 unless Beijing backs down from its new restrictions, which are scheduled to go into effect in November and December.
The United States and China could walk back tensions in high-level meetings scheduled for later this month. Mr. Trump is expected to meet with Xi Jinping, China’s leader, in South Korea, amid a multicountry trip to Asia. But experts say that Beijing is unlikely to remove its new licensing system entirely, meaning it would continue to hold leverage over the United States and other nations if tensions return.
Abigail Hunter, the executive director of the Minerals Center at Securing America’s Future Energy, a nonprofit, said that the Trump administration had been “really proactive in trying to solve these problems” but that it would take time for the United States to develop an alternative supply chain for critical minerals.
Threats to U.S. mineral supplies will just “keep happening until we shift our thinking on how important these kind of trace materials are,” she said, adding, “You’re only as strong as your weakest supply chain link.”
A Longstanding Risk
The extent of the Chinese restrictions has come as a surprise, but Beijing’s use of its exports as a source of leverage has not. As early as 2010, China cut off rare earth exports to pressure Japan in a maritime dispute. Beijing has used other kinds of trade curbs to try to pressure other governments, including Australia, South Korea and Estonia.
Under President Joseph R. Biden Jr., the U.S. government carried out a supply chain review of mineral dependence on China, but little headway was made in changing it. Mining and refining operations can be environmentally harmful, and take years to set up in the United States, if they are approved at all.
The Biden administration also discussed international partnerships. But the volume of Chinese-produced rare earths flooding the global market pushed down prices and made many international projects uncompetitive, analysts said.
“We’ve been very good at admiring the problem and less good at solving it,” said Kurt Campbell, the chairman and co-founder of the Asia Group and the former deputy secretary of state under Mr. Biden.
Last December, China banned the export of several minerals to the United States, in response to technology curbs put in place by the Biden administration. In April, after Mr. Trump threatened tariffs on its exports, Beijing put more limits on its exports of rare earth metals and magnets, causing some global factories to shutter temporarily.
This month, the Chinese government greatly expanded the program, in a move that some in the Trump administration likened to the Japanese attack on Pearl Harbor during World War II. The announcement came after a move by the United States that added thousands of Chinese companies to a so-called entity list, which restricts the U.S. technology those firms are allowed to buy.
Chinese officials have insisted that the licensing program is aimed at fulfilling “international non-proliferation obligations,” and laid the blame on the United States for upsetting ongoing negotiations. Last week, Lin Jian, a spokesman for the Chinese Ministry of Foreign Affairs, said that the licensing system was “in line with international practice.”
Mr. Campbell said that Chinese officials had been privately assuring the Trump administration that the rare earths licensing system was not meant to have such a broad impact, and that the United States had misunderstood its intent. But Beijing was unlikely to withdraw the measures, he said.
“I do not believe that they’re going to back down,” Mr. Campbell said.
The restrictions the Chinese have proposed would affect a variety of minerals, each with different uses and market dynamics. Some are used to create magnets that power wind turbines, electric vehicles and jet engines. Others are used in tiny quantities to make semiconductors, medical devices and cancer treatments.
Sarah Stewart, the chief executive at Silverado Policy Accelerator, a think tank, said that some private companies were trying to be more creative in shoring up domestic supplies. But without government intervention to prop up low prices of minerals, it has been difficult for private companies to justify making the substantial capital investments the industry requires, she said.
“Until this spring, government intervention had been pretty thin in terms of figuring out how to invest in this sector,” Ms. Stewart said. “Now we’re seeing a rush.”
Kush Desai, a White House spokesman, said that the administration was “committed to using every tool at our disposal to safeguard America’s national and economic security,” adding, “The era of America’s foreign dependence ended the day President Trump took office.”
A New Gold Rush
The Trump administration has discussed a variety of unconventional approaches to the problem. Treasury Secretary Scott Bessent said at an investment forum last week that the administration would work to set price floors, do “forward buying” and establish a strategic mineral reserve to “make sure this doesn’t happen again.”
He said the government would look to make direct investments in the rare earths industry, as well as several other strategic sectors.
The government has already taken equity stakes in several companies in the mining sector. In July, the Defense Department agreed to invest $400 million to take a 15 percent stake in MP Materials, which owns a rare earths mine on the California-Nevada border. The company is finishing a factory in Texas to supply General Motors, and is planning a second factory to expand production.
The Trump administration also recently announced it would take stakes in Trilogy Metals, a Canadian company that has proposed copper and zinc mining in Alaska, and Lithium Americas, which is developing one of the world’s largest lithium mines in Nevada.
People familiar with the sector say the Trump administration has been weighing further government investments and eyeing areas like rare earth magnets, deep sea mining and African mines that are not yet under Chinese control. Some potential investment targets are being drawn from lists of applicants for previous funding programs. In other instances, companies in the industry are approaching the Trump administration directly.
The moves have raised concerns among some analysts and executives about how the Trump administration is choosing targets for substantial investments of U.S. taxpayer money, and about whether the deals will pan out. Those concerns are particularly acute when it comes to processing minerals, given the sector features many companies that market new technologies that have not been widely used.
Mahnaz Khan, a vice president at Silverado Policy Accelerator, said that administration officials were knowledgeable about the sector and exercising caution when considering investing in companies pitching unproven solutions.
“I think there is that sense of hesitation,” she said. The administration’s efforts to shore up alternative supplies of rare earths involve multiple agencies. While many of the actions appear aggressive, analysts said they could be impeded by a lack of coordination and turmoil in the government, including an ongoing government shutdown, mass layoffs and a lapse in certain congressional funding.
The National Energy Dominance Council, which was set up in the White House in February, is playing a leading role in finding new sources of minerals outside of China. The Defense, Energy and Treasury Departments and the Export-Import Bank of the United States have been involved with funding and investments, while the State Department has discussed international partnerships.
The Commerce Department has been preparing tariffs on foreign critical minerals and providing analysis of the global supply chain. But some former Commerce employees said that the agency’s staff was hollowed out by a reorganization during the Biden administration and government downsizing in the Trump administration.
The U.S. International Development Finance Corporation, which is responsible for making investments in line with U.S. foreign policy objectives, is also seen as an important player. But congressional funding for the agency expired Oct. 6, and would need to be renewed before the D.F.C. can make new investments.
Some analysts and executives argue that more extensive congressional funding will be needed to support mining and processing or to build up a strategic reserve of the minerals.
Others say that the problem ultimately requires international coordination, given that rare earth deposits are spread out around the world, and that strong environmental protections and high costs may prevent projects from moving forward in the United States.
In his remarks last week, Mr. Bessent said that the United States would speak with allies in Europe, Australia, Canada, India and Asia to respond collectively.
“This is China versus the world. It’s not a U.S.-China problem,” Mr. Bessent said.
Evan Medeiros, a professor at Georgetown University and a senior adviser at the Asia Group, said the Chinese system was “breathtaking in its application of extraterritoriality.” But he questioned whether the Trump administration would “have enough good will and have enough diplomatic nimbleness” to harness international resistance to the Chinese action.
“The real question is whether or not the international community will recognize this and collectively come together,” Mr. Medeiros said.
Ana Swanson covers trade and international economics for The Times and is based in Washington. She has been a journalist for more than a decade.
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