U.S. Proposes Critical Minerals Trade Bloc Aimed at Countering China

• Vice President JD Vance on Wednesday, February 4, 2026, 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.
• 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. President Donald Trump's administration has stepped up efforts to secure U.S. supplies of critical minerals after China rattled senior officials and global markets last year by withholding rare earths required by American automakers and other industrial manufacturers.
• Trump on Monday launched a U.S. strategic stockpile of critical minerals, called Project Vault, backed by US$10Bn in seed funding from the U.S. Export-Import Bank and US$2Bn in private funding. Secretary of State Marco Rubio noted that 55 countries attended the talks in Washington, among them South Korea, India, Thailand, Japan, Germany, Australia, and the Democratic Republic of Congo, all with varying refining or mining capabilities. The minerals are "heavily concentrated in the hands of one country," Rubio said, without referencing China, adding that the situation had become a "tool of leverage in geopolitics."
• At the meeting, U.S. Trade Representative Jamieson Greer announced a bilateral plan with Mexico and a trilateral agreement with the European Union and Japan to strengthen critical mineral supply chains and set the stage for a broader agreement with other allies. The plans aim to explore specific measures such as price supports, market standards, subsidies, and guaranteed purchases to encourage production. The U.S., EU, and Japan also said they would pursue other avenues, including discussions within the Group of 7 and the Minerals Security Partnership.
• By guaranteeing minimum prices through coordinated trade rules, Washington hopes to unlock private investment in mining and processing projects that have struggled to compete with cheaper Chinese supply. Administration officials recently told the industry the U.S. is moving away from granting price floors to individual domestic projects as it seeks a global solution. The approach could reshape global supply chains for materials essential to electric vehicles, semiconductors and defence systems, while raising costs for manufacturers in the short term and escalating trade tensions with Beijing.

(Source: Reuters)