Policy Alert: Executive Order on Critical Minerals

Action: On April 15, the President issued an Executive Order aimed at addressing economic and national security risks associated with the supply of critical minerals and their derivative products. The Order notes that the US remains dependent on foreign sources for critical minerals, many of which are vulnerable to supply chain disruptions resulting from geopolitical tensions, wars, national disasters, pandemics, and trade conflicts. The Order directs the Secretary of Commerce to initiate an investigation under section 232 of the Trade Expansion Act of 1962 to determine the sources and volume of US imports of critical minerals, analyze the “distortive effects” of unfair trade polices enacted by other countries, assess US capacity for processing critical minerals, and make other findings. Based on the findings of the investigation, the Secretary is directed to recommend whether tariffs, incentives for domestic production, and other measures are needed to address the vulnerabilities identified in the investigation.

Key Insights

• Processed critical minerals such as lithium, cobalt, graphite, nickel, and rare earth elements are foundational to U.S. supply chains for energy, defense, and emerging technologies, electric vehicles, and semiconductors. However, the US imports over 80% of its supply of critical minerals, relying heavily on China and Canada.
• China recently blocked US imports of four critical minerals used in the production of semiconductors, batteries, military technology, and other products in response to an earlier round of US tariffs.
• The Administration has made reshoring critical supply chains and strengthening domestic industrial capacity a priority, recently ordering agencies to expedite permitting for projects involving the production of critical minerals and expand mining of critical minerals on federal lands. The Order also added uranium, copper, potash, and gold to the US’ list of critical minerals and delegated Interior Secretary Doug Burgum the power to any other “element, compound, or mineral” to the list.
• Previous Administrations have also invoked the Defense Production Act to support domestic capacity. While the US possesses some deposits of critical minerals, it has limited mining and processing capacity. For other minerals, the US lacks significant deposits, requiring reliance on trading partners.
• Under the Trade Expansion Act, a Federal agency must conduct an investigation before the President may impose tariffs. Given the Administration’s recent actions involving tariffs, this Order likely represents an initial move toward additional tariff measures and a desire to ground tariffs in authorities other than the International Economic Emergency Powers Act, perhaps putting them on more solid legal footing in the event of litigation.