Trump launches investigation into critical minerals - Decision could lead to additional tariffs on imports
US President Donald Trump has signed an executive order to launch an investigation into critical minerals, potentially leading to additional tariffs on industrial resources. The move follows recent investigations into imports of chips and pharmaceuticals, signaling a further escalation of the global trade war.
The investigation aims to “determine the national security effects of imports of critical processed minerals and their derivative products,” according to the official document. “Critical minerals, in the form of processed minerals, are essential raw materials for economic and national security.” The same law has previously been used by Trump to impose 25% tariffs on steel and aluminum, as well as to launch an investigation into copper imports.
Last month, the president signed an executive order to boost domestic production of critical minerals, invoking the Defense Production Act, which provides support such as financing and loans to the sector. The move is widely seen as a blow to China, which dominates the global supply chain.
According to the White House, the US relies on imports of 15 critical minerals, 70% of which come from China. Last Friday, Beijing announced export restrictions on a wide range of critical minerals, such as germanium, gallium, antimony and magnets, in response to Trump's sharp tariff hikes.
The United States has only one rare earth mine and no domestic smelters, leaving it heavily dependent on China for natural resources, including rare earths and critical minerals that are vital components in electrical appliances, battery-powered vehicles, aircraft and defense equipment. A report by TD Economics finds that China dominates global production of more than half of the 50 critical minerals identified by the U.S. government in 2022. It also holds a monopoly on their refining, processing 90% of the world’s rare earth elements. To strengthen its hand in the trade war, the U.S. will need to diversify its supply of these industrial materials.
“Critical processed minerals and their derivative products face significant vulnerabilities in the global supply chain and market distortions due to reliance on a small number of foreign suppliers,” the investigation document states. “The United States’ dependence on imports and the vulnerability of our supply chains increase risks to national security, defense readiness, price stability, prosperity, and economic sustainability.”
In February, Trump demanded €442 billion in Ukraine's rare and critical minerals as part of peace talks, a move also seen as a strategic effort to strengthen the US position against China.
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