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Donald Trump threatened to apply tariffs on key minerals in a move that could raise tensions with China and open a new front in a market-wrapped world trade war.
In an executive order on Tuesday, the US president ordered the Commerce Department to study key mineral supply chains, devising ways to boost American production while reducing trust in imports.
The investigation could potentially impose new customs duties. Trump’s announcement comes just two weeks after his “Liberation Day” tariffs sparked days of market turmoil and warning that a standoff with China could lead to the global economy in a recession.
“President Trump recognizes that reliance on important foreign minerals and their derivatives could put US defense capabilities, infrastructure development and technological innovation at risk,” the order reads.
The investigation threatens to spark a new important mineral trade war as the US attempts to regain control of key Chinese-controlled industries. This is after China stopped exporting several heavy rare earth metals and rare earth magnets used in the defense, robotics and energy industries to buyers around the world.
The Trump administration continues from initiatives launched during the Biden administration to reduce its dependence on the enemy for the minerals and metals used in everything from electric vehicle batteries to jet engines to missiles.
The White House emphasized the importance of minerals and rare earths for military applications, but shortages could affect businesses in the sector from energy to automobile manufacturing.
The Financial Times reported this week that the White House was drafting an executive order to enable stockpiling of metals on the Pacific seabed as part of a broader effort to counter the control of China’s rare earth supply chain.
This probe is carried out under section 232 of the Trade Expansion Act of 1962. This was used by Trump to begin investigating chips, copper and wood. He also used the law to apply tariffs to automobiles, steel and aluminum.
The executive order said the resulting tariffs would replace “mutual” tariffs placed on these important minerals, and in theory could lead to tariffs on minerals where minerals have been lowered instead of being raised.
The White House argued that the United States “relied heavily on foreign sources, particularly hostile countries, for these important materials,” exposing the country to “economic coercion.”
In a recent article in the Washington Quarterly, two Chinese experts, Evan Medeiros and Andrew Polk, said that Beijing has expanded a range of economic tools since 2018 to retaliate against the US and other countries.
Instead of fighting tariffs with tariffs, Beijing has significantly expanded its enforcement toolkit to include export controls for key minerals. For example, in December 2023, China fought back against the US efforts to reduce China’s dependence on mineral supply chains by banning the export of critical rare earth processing equipment.
In addition to banning rare earth exports this week, China recently banned the export of gallium, germanium and antimony to the United States, in addition to other materials with military use, the White House said.
Last year, Beijing warned Japan that it would block gallium, germanium and graphite exports if Tokyo aligns technology-related export restrictions too closely with Washington. The US wanted to impose certain controls to make it more difficult for China to acquire advanced US technology in the field of semiconductors and artificial intelligence.
