The race for critical minerals just got a new player as US Vice President JD Vance recently unveiled plans for a preferential trade bloc aimed at countering China’s dominance in the sector. This initiative comes as Washington seeks to secure critical resources for advanced manufacturing by establishing price floors and coordinating tariffs among allies.
Strategies to Diversify Supply Chains
During a gathering of global ministers in Washington, Vance highlighted the need for a coordinated effort to prevent cheap critical minerals from flooding American markets, which depresses domestic manufacturing. The plan includes:
- Establishing reference prices for critical minerals at each production stage.
- Using adjustable tariffs to maintain pricing integrity for allies within the proposed bloc.
- Working towards an agreements framework with countries like South Korea, India, and Japan.
Background and Global Impact
This initiative is part of a broader strategy initiated during President Donald Trump’s administration, which includes the launch of Project Vault—a strategic stockpile of critical minerals backed by US$10 billion from the Export-Import Bank and US$2 billion in private investment. These efforts come in the wake of China’s restrictions on exports that have alarmed both automakers and tech giants in the US.
Cooperation with Allies
Having 55 nations in attendance, the meeting focused not only on critical minerals but also on joint efforts to stabilise supply chains through:
- Bilateral agreements, such as those with Mexico.
- Trilateral discussions with the European Union and Japan.
- Exploring subsidies and guaranteed purchases to encourage domestic production.
China’s Reaction
As the US looks to diversify its supply chains, China has expressed a willingness to maintain cooperation, emphasising the importance of global supply chains in the critical minerals sector. However, the ongoing tension over tariffs and export restrictions continues to shape trade relations.
Experts suggest that while the aspirations for this trade bloc are ambitious, real change may take years, as establishing a non-reliance on China in the critical minerals sector remains a substantial challenge.