The Trump administration is demolishing whatever is left of Chinese dominance. Having already debilitated Chinese economy by waging a tariffs war and targeting premier Chinese tech companies, Trump is now looking to end China’s monopoly in rare earth metals. Presently, China accounts for 70 per cent of the global production in rare earth metals. The US itself imports 80 per cent of its rare earth minerals directly from China and a part of the remainder indirectly from China through third countries.
Now, the US President Donald Trump has signed an order declaring a national emergency in the American mining industry. The executive order is aimed at boosting the domestic production of rare earth metals critical for military technologies while cutting dependence on the paper dragon. Rare earth metals, a suit of 17 elements, is crucial in the manufacturing of several defence equipment including fighter jets, hypersonic missiles and radiation-hardened electronics.
Ultimately, the US push to cut dependence on China in the rare earth metals sector could spill over to the civilian sector as well. Rare earth metals are an extremely crucial component in the production of smartphones, semiconductors, satellites and electric vehicles (EVs).
President Trump has asked his Cabinet Secretaries to study the matter, with a view to consider grants for production equipment, as also tariffs, quotas or other import restrictions on China and other foreign adversaries.
The executive order also goes on to state that country’s “undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries constitutes an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security, foreign policy, and economy of the United States.”
President Trump’s rare earth metals push makes a lot of sense for three reasons. Firstly, the Communist hardliners in China have been instigating Beijing to weaponize its monopoly by cutting the US off the rare earths supply. CCP mouthpiece Global Times even called Chinese monopoly in rare earths “an ace in Beijing’s hand”.
Secondly, Chinese monopoly in rare earths gives the paper dragon an undue advantage in futuristic sectors like electric vehicles (EVs) and hypersonic weapons, something that the White House should not tolerate. And thirdly, cutting Chinese monopoly in any sector harms China, which is, in itself, a major foreign policy goal for the present dispensation in Washington.
The fact that Trump is serious about his commitment to cut reliance on Chinese rare earth metals becomes clear from how the Executive Order states that the Energy Secretary shall clarify which projects supporting domestic supply chain in the rare earths sector are eligible for loan programs, set aside for clean energy. With this, Trump is looking to resolve the biggest hurdle in indigenising the mining of rare earth metals.
Gavin Wendt, a senior resource analyst at MineLife Pty. told Bloomberg, “The big problem for aspiring producers in the West has been the ability to source project funding and offtake agreements.” He added that if the West wants to substitute manufacturing, “governments might have to step up and help subsidize projects — something they’ve refused to do in the past.”
The US is now pushing the envelope in the rare earth minerals sector. Recently, a bipartisan legislation was introduced by American lawmakers in a bid to reduce dependence on China for rare earths. On the other hand, the European Union too has vowed to create a rare-earths alliance by the end of the year and thus, there couldn’t have been a better time for the US to push domestic manufacturing of rare earth minerals.
In fact, the Executive Order also seeks to “reduce the vulnerability of the United States to the disruption of critical mineral supply chains through cooperation and coordination with partners and allies, including the private sector.”
It makes a lot of sense for Washington to cut down on Chinese dependence in rare earths. It won’t be prudent for the US to rely upon Chinese rare earths when both the US and China are engaged in a historic rivalry and a bitter trade war. The US cannot afford to imperil itself in the key sector by relying upon an adversary like China. President Trump is therefore looking to shift supply chains in rare earths away from the Dragon, and brutally end the last monopoly that China continues to enjoy.