President Donald Trump has opted, for now, to hold off imposing tariffs on rare earths, lithium, and other critical minerals. Instead, he’s directing his administration to seek solutions with international trading partners following the security review.
Trump’s decision follows a Section 232 investigation led by Commerce Secretary Howard Lutnick, which concluded that the United States is dangerously overreliant on foreign sources of processed critical minerals and their derivative products.
Worrisome Industry Exposure
According to the White House, the U.S. is 100% net-import reliant for 12 critical minerals. Furthermore, it is 50% reliant on 29 more, exposing key industries to supply disruptions and price volatility.
“These circumstances are a significant national security vulnerability that could be exploited by foreign actors,” the White House said, noting the importance of these minerals for defense systems, energy infrastructure, and advanced technologies.
Rather than moving immediately to tariffs, Trump ordered Lutnick and U.S. Trade Representative Jamieson Greer to engage with trading partners.
Those talks are expected to focus on mechanisms such as price floors for critical minerals, a proposal that has gained traction among Western miners and policymakers and was discussed this week at meetings involving G7 finance ministers and officials from countries including Australia.
If these negotiations are unsuccessful, Trump might proceed with further action. According to Reuters, he’d “consider setting minimum import prices for critical minerals or may take other measures.”
Reducing Dependence on China
Lutnick’s report warned that domestic mining doesn’t guarantee security if the U.S. remains dependent on foreign countries for refining and processing. While the U.S. is the world’s second-largest producer of mined rare earth oxides, its limited processing capacity means much of that material must still be exported for refining and then reimported.
China plays an outsized role in the issue. It is a top global producer of more than half of the 54 minerals deemed critical by the U.S. Geological Survey and dominates refining capacity for many of them. Over the past year, Beijing has curtailed exports of several materials amid escalating trade tensions with Washington, reinforcing concerns about supply chain concentration. Trump’s order explicitly acknowledges that reliance poses a strategic risk.
“Mining a mineral domestically does not safeguard the national security of the United States if the United States remains dependent on a foreign country for the processing of that mineral,” the President said.
Meanwhile, Lutnick’s report noted a disturbing trend: despite declines in U.S. refining, manufacturing, and production of critical minerals, domestic demand is rising rapidly and is expected to continue rising. Drivers include expanding defense needs, the growth of data centers, nuclear energy, and new energy technologies.
That reality makes resolving the issue a priority for the administration. Trump directed Lutnick and Greer to report back within 180 days on the progress of negotiations, while authorizing continued monitoring of imports and leaving open the option of tariffs or other measures if talks fail.
Image via Shutterstock
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