Treasury Secretary Scott Bessent said the United States plans to set price floors across sectors such as rare earths, suggesting a significant escalation in the administration’s market interventions aimed at countering China‘s influence over supply chains.
The Trump administration has sought to bolster its domestic critical mineral and rare earth supply chain to reduce its reliance on China through executive orders, congressional action, and, notably, deals to take direct stakes in private companies and to pay minimum prices for their products.
Bessent told CNBC in an interview on Wednesday that China has manipulated markets for the past two decades by leveraging its dominance in sectors like rare earths and slashing prices to push out competitors.
“I wouldn’t be surprised,” if the U.S. takes a stake in additional companies, as it has in the rare earth sector, Bessent said.
In July, the War Department entered into a multimillion-dollar deal with MP Materials to help it boost the rare earth supply chain. The deal gives the federal government a 15% stake in MP Materials. It also established a commitment to pay $110 per kilogram for neodymium-praseodymium metal and oxide, products necessary to produce permanent magnets.
The administration’s move to take a stake in several companies such as MP Materials has been deemed an unusual approach. Bessent said, though, that these arrangements are essential to competing with China.
“When you are facing a non-market economy like China, then you have to exercise industrial policy,” Bessent said. “So we’re going to set price floors and the forward buying to make sure that this doesn’t happen again, and we’re going to do it across a range of industries.”
Last week, China announced stricter export controls on rare earth elements and similar technology. Rare earths are key elements for technologies the U.S. needs to remain competitive in the defense and energy sectors. China currently dominates the rare earth and critical minerals market.
Bessent said the administration will not take stake in “non-strategic industries” and must be “very careful not to overreach.”
RARE EARTH STOCKS SOAR AS CHINA TIGHTENS SUPPLY IN TRADE ESCALATION WITH TRUMP
In response to China’s export restrictions last week, Trump threatened on Friday a “massive” increase in tariffs against Beijing.
“There is no way that China should be allowed to hold the World ‘captive,’ but that seems to have been their plan for quite some time, starting with the ‘Magnets’ and, other Elements that they have quietly amassed into somewhat of a Monopoly position, a rather sinister and hostile move, to say the least,” Trump said in a Truth Social post.
