Trade War Brings Critical Minerals Into Focus

Rare earth elements and critical minerals are essential in producing phones, tablets, electric vehicles, airplanes, solar panels, and many other technologies. These minerals, which include samarium and terbium, as well as lithium and cobalt, are notoriously difficult and expensive to extract. Much of the mining and refining of these materials occurs outside of the United States, with a large portion passing through China at some point in the supply chain.

In response to President Trump’s expansive tariff announcement, China established export restrictions on these elements and minerals to the United States, essentially cutting off current supplies. The halt has created anxiety among US companies that rely on these commodities to produce goods. China's move has highlighted the vulnerability of global supply chains and the potential economic consequences of trade disputes.

Although a 90-day pause in the U.S.-China tariff war was recently agreed to, the Chinese controls on critical mineral remain in place. U.S. officials are now exploring alternative sources for these critical materials or considering ways to reduce their dependence on them altogether. One alternative source is Australia, though experts argue no country could completely replace China in the supply chain.

In an effort to supplement the current supply, President Trump recently signed an executive order granting permission to use deep-sea mining to access rare earth elements and critical minerals. Deep-sea mining entails using large machinery to extract minerals and metals from the ocean floor, where they accumulate.

Proponents of deep-sea mining argue it could become a highly profitable industry, potentially decreasing dependence on extensive land-based mining operations. However, scientists caution that the complete environmental consequences of deep-sea mining remain unknown. Deep-sea mining is also controversial internationally, as countries including Britain, India, Norway, Poland, and Russia have criticized President Trump’s moves to conduct deep-sea mining operations.

If the trade war between China and the United States continues or even escalates, more drastic actions concerning rare earth elements and critical minerals will need to be taken. For now, however, US companies and consumers can expect an increase in the price of goods that use these components or shortages of the products on US shelves.