The US Critical Minerals Ministerial and Industrial Policy

The Critical Minerals Ministerial meeting at the State Department, including 54 nations and the EU, ended with a plan for further discussions on a preferential trading area for critical minerals and a pricing floor to encourage production and discourage dumping of low-priced minerals. But negotiations will play out over several months, the US will likely continue on a path of industrial policy, and some producing countries may be reluctant to challenge China.

• The US goal is to adopt a “preferential trading area” for critical minerals with “adjustable tariffs,” excluding China, but many questions remain in practice.
• Two working groups – one of the US, EU, and Japan and the other the US and Mexico – will develop plans over the next 30 and 60 days, respectively, and also seek to identify projects for potential development and investment within six months.
• While the US seeks broad participation in this “plurilateral” effort, many producing countries also have strong economic relations with China, including in this sector, and may be unwilling to jeopardize them, particularly if the “preferential” tariffs are higher than zero tariffs from China.
• The initiative is strongly supported financially by the Administration and offers opportunities for “crowding in” of US and in some cases foreign private financing.

Background

The State Department hosted a Critical Minerals Ministerial attended by 54 countries and the European Commission, including both producer and consumer countries but excluding China, as the principal objective of the Ministerial was to help reduce dependence on China for supplies of critical minerals, including rare earths, and processing of them. However, official statements at the Ministerial were careful not to call out China by name, reflecting the sensitivity of the issue for many countries in attendance which have close economic ties with China.

For some countries, the concerns are real. China, which is setting up an export control regime analogous to that of the US, recently banned exports of “dual use” (civilian and military) items that could be used by the Japan Self-Defense Forces.¹ The recent US-China trade agreement addresses concerns over exports of rare earths and magnets but is only temporary, and in any event the Administration seeks to reduce dependence on China for these items.

One outcome of the Ministerial is Project FORGE (Forum on Resource Geostrategic Engagement), which builds on the Biden Administration’s Minerals Security Partnership and includes both consuming and producing countries, such as Angola, Democratic Republic of Congo, and Ukraine. Its emphasis is policy coordination and efforts at “collective action” as “geopolitical risks continue to rise,” in the words of Japanese State Minister for Foreign Affairs Horii Iwao, who spoke at the meeting.

The Administration also announced Project Vault, a plan to stockpile cobalt, lithium, and other minerals and metals. The US Export-Import Bank (EXIM) will provide a $10 billion loan to support the stockpile, and the effort has access to $2 billion in private financing. It will be supported by several major US companies that use the metals and minerals. EXIM is also supporting critical minerals projects both in the US and abroad, and, with other agencies, is seeking to “crowd in” private funding to accompany US funding, loans, or other investments. In December, the Administration also launched “Pax Silica,” an effort to secure supply chains related to AI, involving Australia, Israel, Japan, South Korea, Qatar, the United Kingdom, and the United Arab Emirates, with India expected to join shortly.

“Preferential Trade Zone” Involving Allies and Partners

Responding to the challenge of China’s dominance of processing and mining of rare earths and other critical minerals, the Ministerial marked the most significant effort by the Administration to involve a large number of allied and “partner” countries in a plurilateral trade effort.

From the Administration’s perspective, as the Vice President said, “the international market for critical minerals is failing” because of concentrated supply chains and low-cost supplies flooding markets preventing development of long-term sources of supply, which reinforces excessive dominance of the markets. Thus, in unusual language for this Administration, the Vice President termed this “something where our alliances and friendships can really help one another. We’re all on the same team; we’re all rowing in the same direction.”²

The Administration’s goal is therefore “a preferential trade zone for critical minerals, protected from external disruptions through enforceable price floors. We will establish reference prices for critical minerals at each stage of production, pricing that reflects real-world, fair-market value.” The prices would be “maintained through adjustable tariffs to uphold pricing integrity.”

The price floor, a concept supported by some producers such as Australia,³ is driven by concerns over the long-term nature of mining projects to achieve profitability as, in the Vice President’s words, “foreign supply floods the market, the prices collapse, and investors pull out.” Price weakness gives an advantage to China, but the Administration hopes that a system of preferential tariffs, combined with the price floor, will lead to price stability that encourages mining and processing, even as it may raise input costs for industries using the critical minerals.

The third aspect of the initiative, consistent with the other efforts of the Administration, is a frank industrial policy. As the Vice President said, “[w]e’ve overturned old orthodoxies and taken direct stakes in high-value mining and processing companies [.]” While this may lead to more reliable supplies, it also raises typical concerns with industrial policy, such as the efficiency of direct government involvement in the economy. Here, industrial policy would also be led by tariffs as well as direct government investment.

The official Chinese response to the Ministerial was restrained: “China has long played an important and constructive role in keeping the global industrial and supply chains of critical minerals safe and stable and is willing to continue to make active efforts in this regard.”⁴

Next Steps

The Administration encouraged countries to sign bilateral agreements on critical minerals. Ten had been previously signed, and eleven (Argentina, the Cook Islands, Ecuador, Guinea Morocco, Paraguay, Peru, the Philippines, the UAE, the UK, and Uzbekistan) were signed at the Ministerial. In addition, the US signed a minerals agreement with Australia worth $8.5 billion.

Beyond this, the formal next steps are that the US, EU, and Japan will negotiate over the next 30 days regarding “coordinated trade policies and mechanisms, such as border-adjusted price floors, that can mitigate critical supply chain vulnerabilities.”⁵ A similar negotiation will take place with Mexico over the next 60 days.⁶ The groups will also ideally identify projects for potential investment in mining, processing, reprocessing, and recycling within six months.

Canada has not yet committed to the initiative. While Canada attended at Foreign Minister level, Canada was not mentioned in the working groups. Instead, the Canadian Government is seeking to use the importance of the critical minerals issue as leverage to encourage a formal US commitment to talks on renewing the USMCA trade agreement before joining.⁷ From the Canadian standpoint, this is a slightly risky but necessary decision, as earlier unilateral concessions by Canada (notably, removing the digital services tax) did not result in improvements to the relationship or an end to threats against Canada.

Can It Work?

The initiative presents the question of access to critical minerals and their supply chains as a national security issue as well as an economic security issue, somewhat analogous to the position of oil in 20th century conflicts. From one perspective, Project Vault is a stockpile somewhat analogous to the Strategic Petroleum Reserve; from another perspective, the involvement here of government with the private sector is deeper and more complex, leading to concerns that the US is embarking strongly on a form of industrial policy in this area.

Many questions remain about the initiative. Would the bloc really include possibly 50 countries in a true plurilateral effort, and what would motivate producing countries to participate? How would a preferential trade zone driven by “adjustable tariffs” actually work? Would the US take the lead in setting the tariffs and would they rise automatically in relation to supply, to preserve the pricing floor? Would preferential tariffs continue the exemptions from US tariffs that countries such as Kazakhstan and Uzbekistan currently enjoy for uranium, as the US cannot meet its needs through domestic supplies? Or could the tariffs be designed instead to include pressure on countries not to deal with China in this sector and to give preference to the US?

More broadly, therefore, an important question for the eventual success of the initiative will be the attitude of countries – such as the Democratic Republic of Congo and other countries in Africa, Malaysia, Indonesia, and the countries of Central Asia – where US and Chinese companies each have a presence and commercial and political rivalry exists. While the Administration will not want these countries to cooperate with China in this area, those countries will likely not want to be forced to make the choice.

Europe, too, may implicitly take a somewhat more cautious approach even as it seeks to reaffirm defense and economic ties with the US, partly from divisions within the EU on its ideal relationship with China and partly from concerns over the potential impact on European trade. Critical minerals and supply chains will feature on the French Presidency’s agenda at the G7 meeting in Évian-les-Bains, France in June. Europe will also likely focus on improving its recycling and reprocessing capability, to reduce dependence on outside sources.

Most important, however, will be the attitude of the US and whether the relative openness at the Ministerial will endure; some nations may be concerned by language from the State Department that the effort results from “reinvigorated diplomatic and commercial engagement driven by America First values”⁸ – does that truly preserve a place for them? For the US, the key is guaranteeing access to critical minerals, and bilateral agreements may seek to ensure the US takes first share of new developments, as US investors and mining companies are expanding their presence globally. It seems clear that the US is taking this step not out of a preference for more open trade but rather the importance of the issue, a realization that the US simply cannot act alone to secure the supplies it needs, and the importance of involving the private sector.

Reconciling a system of preferential tariffs with price floors could be tricky unless the idea turns into something akin to a common external tariff for the participating countries, to avoid distortions in the global market. This seems unlikely, but guaranteeing supply is essential for the US, Japan, Europe, and other consuming countries, as are the relations between consuming and producing countries and expanding production (including processing and recycling) in advanced economies that have abundant supplies or expertise such as the US, Canada, Australia, France, and others. The negotiations will therefore be important not only for the future of US industrial policy and industries that rely on critical minerals but also for US trade policy.

Endnotes

1. Reuters, “China bans export of dual-use items for military purposes to Japan over Taiwan remarks,” Jan. 8, 2026.

2. US Department of State, “Opening Remarks of the Critical Minerals Ministerial,” Feb. 4, 2026.

3. Reuters, “Australia says US price floor backdown won’t derail its critical minerals strategy,” Jan. 30, 2026. 

4. Bhagyareshee Garekar, “S’pore will remain a trusted hub for global supply chains: Vivian at US-led critical minerals meeting,” Straits Times, Feb. 5, 2026. 

5. Office of the US Trade Representative, “Ambassador Jamieson Greer Announces Critical Minerals Cooperation with the European Union and Japan,” Feb. 4, 2026. 

6. Office of the US Trade Representative, “Ambassador Jamieson Greer Announces U.S.-Mexico Action Plan on Critical Minerals,” Feb. 4, 2026 

7. Steven Chase, “Any decision to join U.S. critical minerals bloc will be part of USMCA talks, Anand says,” The Globe and Mail, February 4, 2026. 

8. US Department of State, “Critical Minerals Ministerial.”