America’s New Critical Minerals Playbook

When President Donald Trump met China’s leader Xi Jinping in Beijing in May, an economic chokepoint hovered over their negotiations: critical minerals. The global economy was already roiled by the de facto closure of the Strait of Hormuz, which has blocked nearly 20% of the world’s energy supply. And after the meeting, the White House published a fact sheet heralding a new “constructive relationship of strategic stability” between the world’s two largest economies, signalling a new détente.

The year leading up to that moment had been particularly volatile. On Apr. 2, 2025, President Trump announced global tariffs, with the highest rates against China, which faced a 145% tariff and responded with its own 125% tariff on American goods. Shortly after, China introduced export controls on rare earths, a subset of critical minerals that are vital for industries ranging from defense to green energy, and whose downstream processing and production the country dominates. Within a month, shipments of rare earth magnets from China dropped by 74% year-on-year, and automakers in the United States, Japan, and Europe, dependent on these inputs, slowed or, in some cases, closed production.

Rounds of negotiations between the US and China followed. In October, China expanded its export controls on rare earths further and with new tools. The new Beijing rules mirrored the foreign direct product rule—which Washington has used to block semiconductor-related exports to China from third countries—and required foreign businesses to seek approval from Beijing before exporting magnets containing even traces of rare earth materials sourced from China or produced using Chinese techniques or technology.

Later that fall, President Trump met Xi in South Korea, setting the stage for their Beijing summit. But statements about stability that came out of that meeting don’t mean stasis. In fact, the equations behind this long-standing economic contest between the US and China may be rebalancing, albeit slowly, and with long time horizons still ahead. That’s because, in the leadup to and following the Beijing summit in May, a wave of private and public investments, offtake agreements, international commitments, and pushes for stockpiling and industrialization of critical minerals supply chains through new mines and new production facilities have begun to move the market.

This current phase of American, and indeed global, economic statecraft is defined by a dual imperative: biding time and building resilience and capacity, with more diverse and robust supplies of the resources that underpin so much of the global economy, and national security.

Reshaping the critical minerals competition

Beijing did not come to dominate the critical minerals market overnight. “The Middle East has oil. China has rare earth metals,” Deng Xiaoping, the leader of China’s economic reforms, is believed to have said in 1992. Even that statement may understate the degree of market concentration seen today. During the Arab oil embargo, the Organization of the Petroleum Exporting Countries accounted for slightly over 50% of global crude oil production, a figure that has since fallen to below 35%. China, by contrast, now leads production for 30 of the 44 critical minerals for which there are reliable estimates, commands an average market share of over 70% for strategic minerals, and accounts for 93% of magnet manufacturing.

The critical minerals standoff between Washington and Beijing last year was novel, but not unprecedented. In 2010, Beijing embargoed rare earths exports to Tokyo as a result of a dispute with Japan. In 2020, China reportedly cut off exports of graphite to Sweden. Indeed, last year’s measures added to a litany of resource nationalism: globally, restrictions on critical minerals have risen five fold since 2009. Despite the high levels of concentration in this market there is, however, no monopoly on the sources of rare earths: Australia, Brazil, Canada, Greenland, Indonesia, Kazakhstan, Ukraine, the US, and Russia all possess substantial mineral deposits, as do many other countries and territories. The landscape changes when we consider the capacity for rare earth purification, synthesis or fabrication, and manufacturing assembly. This is where China has unmatched capacity and a strategy to hold it. As the Department of Defense has noted, Chinese firms, willing to operate at losses, have “strategically flood[ed] the global market” with rare earth elements to decrease competition.

But China’s long-term dominance of critical minerals is far from settled. New deposits of minerals are being discovered with increasing frequency around the world. Global rare earth mine production has more than tripled since 2014, rising from 110,000 tons to over 390,000 tons. New sources of nickel and cobalt are coming online in places like Indonesia, and supplies of lithium, graphite, and rare earths are diversifying. Fresh investments in critical minerals processing, manufacturing, and recycling are expanding global capacity—including new processing and refining facilities in Japan and South Korea, built to serve American supply chains in response to the Inflation Reduction Act and the One Big, Beautiful Bill Act.

Still, supply chains don’t move quickly, and can’t be built quickly, either. The main bottlenecks remain: minerals mined outside China are almost always sent there for refining, processing, and manufacturing. Alternative capacity in these segments of the supply chain doesn’t exist at scale. The markets’ demand for what these supply chains produce isn’t static either. Electric vehicles, which are powered by vast quantities of minerals like cobalt, lithium, and nickel, continue to drive demand, though with less urgency following regulatory rollbacks in the United States and Europe. But beyond mobility, demand from battery manufacturing and electrification continues to accelerate, especially as countries seek greater self-reliance for energy amid uncertainty over Middle Eastern supply.

Meanwhile, the AI and defense booms have driven a step change across industries. America imports more than 70% of 12 of the 20 critical minerals used in data centers. With global data center expansion accelerating, semiconductors, including leading-edge chips made in Taiwan, are intensifying the need for minerals like silicon. At the same time, the appetite for the chips that power both mass-produced and sometimes exquisite defense systems is surging. The Silverado Policy Accelerator has identified 12 strategic minerals—from antimony and germanium to tungsten—without which missile systems, military aircraft, ammunition, and more cannot be produced or operated.  National security is a pressing concern for every government, but the world’s defense supply chains are global. And they rest on mineral deposits, refining capacity, and industrial bases that cross borders, and therefore require strategic cooperation.

Old industrial policy meets new commodity statecraft

Facing economic competition and coercion, governments are investing up and down critical minerals supply chains. These decisions involve trade offs: upfront costs and both known and unknown risks and results. Governments globally increasingly would rather risk an oversupplied critical minerals market than face a scenario in which much-needed minerals are unavailable to them and to their domestic industries. America has acted across Democratic and Republican administrations. In 2019, the first Trump Administration declared that domestic production of rare earth elements and materials was “essential to the national defense.” Following the passage of the Inflation Reduction Act, which provided subsidies for green technologies like batteries, the Pentagon invested more than $400 million in critical minerals manufacturing projects based in America in 2024, and the Department of Energy soon followed with $1.82 billion across 14 projects.

Last year, the Department of Defense broke new ground, announcing an investment of another $400 million—this time in MP Materials—along with a price floor and offtake agreement. Meanwhile, the Department of Energy is taking a 5% stake in Lithium America and a 5% stake in Thacker Pass, potentially one of the largest lithium deposits in North America. The Development Finance Corporation, created during the first Trump Administration and now granted an expanded mandate, along with new access to equity, and a higher financing cap, is becoming a leader on strategic investments in critical minerals. That growth includes more deals—and larger ones—especially in consortia with the private sector and in geographies such as Angola and Malawi, where processing can be co-located with mining.

Perhaps most ambitiously, the Export-Import Bank’s Project Vault is extending a $10 billion direct loan and crowding in private capital to launch a strategic critical minerals reserve, with a focus on refined and semi-processed materials and building a new stockpile in case of emergencies. Even in a more fractured global economy, critical minerals offer areas for cooperation with like-minded partners. Korea Zinc, the world’s largest zinc smelter, has announced a $7.4 billion smelter project to be funded largely by the US government. In Brussels, the European Commission selected 47 strategic projects to reduce European dependency. And the Department of Defense and MP Materials are financing an equity position targeting a 49% stake in a joint venture with a Saudi Arabian mining company to develop a rare earth processing facility in the Kingdom, even as Riyadh has launched its own mineral exploration program as a part of Vision 2030. As of May, the White House claims to have concluded 27 new critical minerals deals in the past 12 months.

Critical minerals have become an important part of longstanding trade negotiations. The US Trade Representative is pursuing plurilateral agreements, including pricing mechanisms and border measures, and critical minerals have become standard features of new trade agreements. The mandatory review of the United States-Mexico-Canada Agreement (USMCA)—the six-year-old free-trade pact between the three countries—in July will reportedly be no exception. And nations across the globe are forming new blocs with critical minerals at their core. The European Union’s Mercosur Partnership agreement with Latin American countries—an agreement that took decades to negotiate—aims to promote European investment in Western Hemispheric processing to reduce dependence on single sources of supply. Japan is also expanding its economic ties to Latin America, with an eye toward the region’s mineral deposits.

In this context, several countries in the Global South, endowed with vast deposits of critical and strategic minerals, command meaningful leverage. Zimbabwe implemented strict lithium concentrate export quotas, a move similar to one made by the Democratic Republic of Congo, which produces over 70% of the world’s cobalt and implemented a months-long export ban in Feb. 2025 to address overproduction. Likewise, Indonesia, home to over 60% of global nickel supply, significantly reduced its 2026 mining quotas to combat a supply glut and boost falling prices. And in March, Tajikistan, with rich deposits of antimony, approved a draft agreement with Britain to collaborate on critical mineral extraction and processing, and it continues a dialogue with other Central Asian nations and the US. In each of these countries, leaders are looking for additional partners beyond Chinese companies to reduce their own reliance on a single market.

That leverage is delivering results: these resource-rich nations are attracting greater foreign direct investment. Consider the Lobito Transit Corridor,  an 800-mile, rail-based logistics network running from Angola’s border with the Democratic Republic of Congo to Lobito, a port city on Angola’s Atlantic Ocean coast. The rail corridor was built by European colonists in 1903 and had been closed since sustaining damage during Angola’s civil war in the late 1970s. China, which controlled a majority of critical mineral mines in the region, helped rebuild it between the mid-2000s and the mid-2010s. The Biden Administration invested four billion dollars in the Lobito Corridor. During the second Trump Administration, the Development Finance Corporation has finalized multiple loans and agreements to move the initiative forward. A new rail project, jointly funded by the European Union and the US, aims to connect the existing rail network into the copper-rich areas of Zambia.

Diplomacy around critical minerals and other material foundations of cutting-edge systems is intensifying as technology becomes central to state power. Pax Silica, launched by the State Department in Dec. 2025, aims to build an economic security network across the full AI technology stack, including critical minerals. The US-Australia critical minerals agreement added stockpile provisions and price supports, and was followed by a similar agreement with Japan. In February, Washington hosted the first Critical Minerals Ministerial, bringing together representatives from 54 countries and the European Commission, where they launched FORGE, the successor to the Mineral Security Partnership.

Even matters of war and peace are now about critical materials. The United States-Ukraine Reconstruction Investment Fund gave Washington a stake in future revenue earned from Kyiv’s critical mineral reserves, including vast deposits of titanium and lithium in areas currently occupied by Russia. A US-mediated agreement between the Democratic Republic of the Congo and Rwanda led to a strategic partnership offering American firms preferential access. And after the ouster of Nicolás Maduro, Secretary of the Interior Doug Burgum brought a delegation of more than two dozen American mining and trading companies to Venezuela.

These initiatives are neither without costs nor assured of success. Onshoring, or even nearshoring, complex supply chains adds friction and can reduce efficiency in the name of uncertain future resilience. Lead times for critical minerals projects in America often fall between at least 5 and 10 years, spanning multiple political and investment cycles. But after more than 15 years of economic competition over critical minerals, the map is beginning to change.

Unlocking the private sector

The global market for critical minerals is adjusting to new demand signals, finding substitutes, shifting supply chains, and boosting extraction at existing sites and in new geographies. America has the advantages of its free economic competition, leading research institutions, deep capital markets, and global partnerships. Capitalizing on those advantages will require building more competitive industries up and down the supply chain and strategic investments by both the public and private sectors. America will also need prudent regulatory strategies and reforms.

The permitting for a new mine in the US can take 10 years or more, and the process must abide by the General Mining Law of 1872, a statute that has not been significantly updated since the administration of Ulysses S. Grant. Meanwhile, developing a new mine, from discovery to production, can take decades. The Trump Administration is trying to overcome such obstacles through executive action and the National Energy Dominance Council, and has made real progress. Both the public and private sectors have roles to play here.

Education and training represent another area demanding clear-eyed policy, particularly in fields like metals processing and synthesis, as new technologies transform the character of work. This is an arena of real competition. In recent years, China has produced over 50% more STEM doctoral graduates annually than the US, a gap that continues to widen. One Chinese battery manufacturer alone employs more than 18,000 researchers, far surpassing competitors in the West.

Old industries are changing, and so too are the best approaches for education and training. America and its partners have a pressing need to promote graduates in mining and chemical engineering, materials science, and interdisciplinary study as well as technologists and workers who can leverage tools such as artificial intelligence to revolutionize how the material foundations of the digital economy are mined and made. Specifically, AI and automation can optimize factory production, and in the mining sector, advanced autonomous drilling can dramatically boost extraction efficiency. The result would be an upgraded workforce capable of leveraging the latest technologies and techniques and leapfrogging existing bottlenecks. Getting new facilities for this workforce up to speed would require investing in not only the workforce and research, but also new production techniques, substitute and recycled materials, and automation in a field that has attracted few new entrants.

Scientific discoveries are reshaping the market as well, making it so that the materials deemed critical today may not be critical tomorrow. Rare earth-free magnets, AI-assisted materials discovery and processing, and rare earth recovery and refining from electronic and other waste materials, as prioritized in a recent $134 million Department of Energy announcement, all hold promise. New opportunities in recycling and other circular solutions are expanding the toolkit for addressing critical minerals supply challenges.

But bridging the gap between research and commercial deployment remains a central concern, as a new report by the Council on Foreign Relations makes clear. Governments can boost market confidence, provide strong demand signals, and complement private industry through procurement mandates, domestic and allied-partner content requirements, and offtake agreements that de-risk private investment. They can also open more dialogues with the private sector to better understand what, and where, the most urgent needs are today, and may be in the future.

The path to de-risking is steep and long, especially across complex, global supply chains. Past efforts to reduce dependence have repeatedly cycled through moments of urgency, only to be forgotten amid market and political changes. To have lasting effect, new frameworks, partnerships and investments will need to be operationalized and institutionalized, with deadlines, commitments, and dedicated experts committed to following through. 

Yet in the past year, the global competition over critical minerals has entered a new and consequential phase, shaped by the rise of novel economic statecraft tools and shifting demand signals from the AI, defense, and clean energy sectors. The larger trends reshaping the world—economic competition and technological advancement among them—are reorienting a decades-long contest. True strategic stability and national security will require sustained investment, diversified supply chains, and industrial renewal.