US proposes critical minerals trade bloc aimed at countering China in rare move with allies
Trump's administration calls for preferential trade zone among allies on critical minerals crucial for advanced technology, in a rare turn to multilateralism in the face of China's dominance.
US Vice President JD Vance has unveiled plans to marshal allies into a preferential trade bloc for critical minerals, proposing coordinated price floors as Washington escalates efforts to loosen China’s grip on materials crucial to advanced manufacturing.
Wednesday’s meeting in Washington joined by representatives of more than 50 countries comes after President Donald Trump on Monday launched a strategic stockpile of critical minerals, called Project Vault, backed by $10 billion in seed funding from the US Export-Import Bank and $2 billion in private funding.
"We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers," Vance told the gathering of visiting ministers in Washington without mentioning China.
"We will establish reference prices for critical minerals at each stage of production, pricing that reflects real-world fair market value, and for members of the preferential zone, these reference prices will operate as a floor maintained through adjustable tariffs to uphold pricing integrity," Vance said.
Shares of minerals companies fell on the news. MP Materials lost 2.8 percent, Critical Metals dropped 7.7 percent, NioCorp Developments was down 2.8 percent, and USA Rare Earths lost 6.6 percent in morning trading in New York.
China has wielded its chokehold on the processing of many minerals as geo-economic leverage, at times curbing exports, suppressing prices and undercutting other countries' ability to diversify sources of the materials used to make semiconductors, electric vehicles and advanced weapons.
Prices regulation for critical minerals
Vance called for a "trading bloc among allies and partners" that guarantees American access while "also expanding production across the entire zone."
Vance, who has billed himself as a champion of the American working class, said that the effort would create "good-paying jobs, skilled jobs, for the American labor force."
"But we seek to make sure our friends and our allies are part of this and that you all are covered as well," said Vance, a frequent critic of US involvement overseas.
The bloc, which aims to cover two-thirds of the the global economy, would regulate minimum prices for critical minerals, fearing that major exports by China could quickly rattle markets.
"Investment is nearly impossible, and it will stay that way so long as prices are erratic and unpredictable," Vance said.
China mines some 60 percent of the world's rare earths and processes around 90 percent. In October, it offered the United States a one-year reprieve in a deal with Trump in October.
The United States has aggressively reached agreements on critical minerals with allies including Japan, Australia, Saudi Arabia, South Korea and Thailand.
Interior Secretary Doug Burgum said that another 11 countries will join on Wednesday and that another 20 are interested in participating.