The Trump administration is pushing to form a trading bloc with allied countries to set price floors and coordinate financing on critical minerals to counter China‘s grip on the market, Vice President JD Vance said.
The arrangement would help guard against China using its dominance of the supply chain as leverage, Vance said on Wednesday at the State Department’s Critical Mineral Ministerial, which brought together over 50 countries to discuss diversifying the critical mineral supply chain.
“Every single one of us represented in this room has become dependent on arrangements we did not choose, and right now, arrangements that we cannot control,” Vance said in opening remarks at the conference.
Vance said the goal of the conference was to “align trade policy, development, finance, and diplomatic engagement” toward diversifying the critical mineral supply chain.
China controls approximately 90% of the global supply of critical minerals and rare earth elements. It has engaged in market manipulation, such as flooding the market with minerals to drive prices down, which makes it difficult for other countries to compete.
Vance said the administration proposed a system to counter market manipulation by creating a trading bloc among countries, setting minimum prices for critical minerals, and maintaining those prices through adjustable tariffs to uphold pricing integrity and prevent cheap critical minerals from undercutting domestic manufacturers.
Secretary of State Marco Rubio said there are about 55 partners at the conference, and the U.S. is hoping to enter into collaborations, with many having already signed on.
The critical mineral supply is “heavily concentrated in the hands of one country, and that lends itself to, at worst-case scenario, being used as a tool of leverage in geopolitics,” Rubio said.
He added that some countries have critical minerals but are unable to mine or process them because a foreign competitor will undercut prices through state subsidies and unfair practices.
“We understand that this is a global challenge that requires a global response,” Rubio said.
China has imposed rounds of export restrictions on rare earth materials to the United States and other countries. In November, President Donald Trump reached an agreement with China to lift some export controls for a year, but restrictions on other rare earths remain in place.
The Trump administration has sought to expand the domestic supply of critical minerals and reduce its reliance on China, as the materials are necessary for technologies in the energy and defense sectors, including batteries, fighter jets, missiles, and night vision.
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The administration has taken unconventional approaches to boost domestic mineral supply, including taking direct stakes in mining companies. As recently as last month, the Commerce Department entered into a nonbinding deal with USA Rare Earth.
As part of the agreement, the Commerce Department will provide the company with $1.6 billion, including $277 million in federal funding and a $1.3 billion loan. In return, the mineral company will issue the Commerce Department 16.1 million shares of common stock and 17.6 million warrants.
