President Donald Trump is holding off on new tariffs targeting imports of critical minerals, following a months-long review to determine whether foreign shipments threatened US national security.
Trump, in a presidential proclamation released Wednesday following a US Commerce Department investigation, said he would instead seek to negotiate agreements with foreign nations to “ensure the United States has adequate critical mineral supplies and to mitigate the supply chain vulnerabilities as quickly as possible.”
The president is floating price floors on imports — not just traditional percentage-based tariffs — to develop the supply chains for those materials that run through US-aligned nations.
In the document, Trump said “it may be appropriate to impose import restrictions, such as tariffs, if satisfactory agreements are not reached in a timely manner.”
Industry watchers for months have awaited the decision from the investigation, begun last April under Section 232 of the Trade Expansion Act, which concluded that imports of processed critical minerals and their derivative products imperiled US national security, citing their importance to a wide swath of defense industries.
The absence of any immediate tariffs is a signal that the administration is seeking to avoid destabilizing a trade truce Trump and Chinese President Xi Jinping agreed to last fall, under which the sides pledged to lower import-tax rates and ease export controls.
Trump has been under pressure to respond after China, the world's largest processor of many critical minerals, constrained access to rare earths crucial to advanced technologies during a trade dispute last year.
More broadly, the Section 232 authority behind the minerals probe is seen as a way the administration could rebuild its tariff regime if the Supreme Court strikes down Trump's global levies.
Price Floors
Trump's proclamation makes clear that the US will consider price floors for trade in critical minerals, including possible “minimum import prices” for specific materials and potential tariffs in the future to mitigate supply chain vulnerabilities.
Trump is for now reserving the tool, but under Wednesday's proclamation he could impose tariffs on critical minerals from countries whose supplies are priced artificially low, effectively raising the cost of those imports to a level that would sustain production entering the US from other nations, a person familiar with the approach said.
The tactic is similar to the duties imposed in connection with conventional anti-dumping and anti-subsidization trade cases — where final levies generally are calibrated to counteract subsidies and artificially low prices of foreign suppliers and instead buttress domestic producers. Here, the potential tariffs on some countries could act to bolster — and create an effective price floor — for other foreign critical mineral suppliers instead.
Nick Iacovella, executive vice president of the Coalition for a Prosperous America, a group that supports domestic manufacturing, applauded Trump's proclamation. “This approach gives American manufacturers the confidence they need to invest, expand and rebuild critical supply chains here at home,” he said by email.
Wednesday's action may also have implications for uranium, which has growing appeal as the US looks to build out nuclear power rapidly to keep up with the massive electricity needs for artificial intelligence. The proclamation notes uranium as one of the critical minerals “the energy sector relies on.”
A major obstacle the administration will have to address, if tariffs are eventually imposed, is the lack of domestic production the US has for most of these raw materials.
Traditionally, trade lawyers have argued that tariffs are needed to protect an existing industry that can prosper with appropriate controls that prevent foreign nations from oversupplying the US market to take down American companies.
Given that China processes more than 80% of the world's rare earths, and Kazakhstan accounts for the majority of the world's uranium, it isn't clear how US companies will benefit as paltry domestic production forces them to rely on foreign supplies.
