The U.S. president has indicated the possibility of imposing tariffs on critical minerals, a move that could escalate tensions with China and add complexity to the ongoing global trade conflict.
In an executive order issued on Tuesday, President Trump directed the Commerce Department to review the supply chains of critical minerals and identify strategies to increase U.S. production while reducing dependence on foreign imports.
The inquiry could result in new tariffs, and follows closely after the market turbulence caused by Trump’s earlier “liberation day” tariffs, which raised concerns about a potential recession due to heightened trade tensions with China.
According to the executive order, President Trump highlighted that overdependence on foreign critical minerals could threaten U.S. defense capabilities, infrastructure projects, and technological progress.
The move signals the potential for a renewed trade dispute over critical minerals, an industry largely controlled by China. This follows China’s suspension of exports of key heavy rare earth metals and magnets, which are used in sectors like defense, robotics, and energy.
The Trump administration’s actions continue the initiatives started under the Biden administration to reduce U.S. reliance on foreign sources for essential minerals and metals, which are crucial for products ranging from electric car batteries to missiles.
While the administration emphasized the importance of securing these materials for defense purposes, any shortage could also impact industries such as energy and automotive manufacturing.
The Financial Times recently reported that the White House is considering an executive order to facilitate the stockpiling of metals found on the Pacific Ocean seabed as part of broader efforts to reduce reliance on China’s rare earth supply chains.
The investigation will be conducted under Section 232 of the Trade Expansion Act of 1962, a law Trump has used in the past to initiate inquiries into industries such as chips, copper, and lumber, and to impose tariffs on steel, aluminum, and automobiles.
The executive order suggests that any tariffs resulting from the investigation could replace “reciprocal” tariffs on these minerals, potentially lowering tariffs instead of increasing them.
The White House has argued that the U.S. remains heavily reliant on foreign sources, especially from nations considered adversarial, for these critical materials, which exposes the country to economic risks.
In a recent analysis in The Washington Quarterly, China experts Evan Medeiros and Andrew Polk noted that since 2018, China has broadened its range of economic tools to retaliate against the U.S. and other countries.
Rather than responding with tariffs, Beijing has increasingly used export controls on critical minerals. For instance, in December 2023, China countered U.S. efforts to reduce dependence on its mineral supply chains by banning the export of essential rare earth processing equipment.
In addition to restricting exports of rare earths this week, China has also prohibited the export of materials such as gallium, germanium, and antimony to the U.S., which are vital for military applications, according to the White House.
Last year, China warned Japan that it would block exports of gallium, germanium, and graphite if Japan aligned too closely with the U.S. on technology-related export controls, which were designed to limit China’s access to advanced American technologies in fields like semiconductors and artificial intelligence.
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