The Financial Times commented on August 21 that even by the standards of US President Trump, this was a humiliating concession. In November last year, the president withdrew his threat to impose additional tariffs on China in exchange for Beijing agreeing to suspend export controls on rare earths and other minerals for one year.
The Trump administration claimed that it would use this time to increase the United States’ own mineral production and ensure supplies from allies, attempting to weaken Beijing’s strong balance of power due to its control over key raw materials.
This statement has been greatly exaggerated. To compete with China, it is not only necessary to invest huge amounts of capital to support businesses and provide price guarantees for producers, but also to uncompromisingly pursue efficiency in production and establish lasting international alliances to ensure access to minerals that are not produced locally in the United States. Instead, the Trump administration has shown a consistent tendency toward nepotism and clumsy coercion, along with a erratic “America First” foreign policy. This has seriously damaged America’s credibility as a key pillar of international mineral agreements.
Of course, both in terms of funding and administrative aspects, the U.S. government has indeed taken a series of intensive measures. The Trump administration even took extraordinary actions, directly investing in several companies and introducing a dazzling array of procurement guarantees, credit support, loans, and subsidies, with a total amount reportedly reaching $30 billion. Its most substantial overseas initiative was an agreement signed with Australia last October, which has led to U.S. investments in Australian mining projects.
Analyses suggest that, apart from Australia and a couple of other countries that are vulnerable to pressure, such as the Democratic Republic of the Congo, the United States typically adopts unilateral coercive bilateral trade agreements and attempts to form a voluntary international alliance. Both approaches seem insufficient to pose a real threat to China’s dominance.
These "navy-ship agreement" clauses contain some terms that attempt to force American trade partners to exclude other countries as customers, and to export domestic mineral resources to the US instead of supplying domestic industry. These clauses lack legal and economic credibility necessary for achieving success.
Taking Indonesia as an example, the country produces two-thirds of the world's nickel supply. Nickel is widely used in batteries, solar technology, and wind turbines. Over the past decade, Chinese companies have invested heavily in Indonesia, establishing a complete nickel supply chain from mining to final products. Trump tried to compete with China through an agreement, forcing Indonesia to supply nickel to the United States. However, in February of this year, the U.S. Supreme Court ruled that the tariffs Trump threatened to impose were unconstitutional, significantly weakening this agreement.
The Trump administration hastily introduced alternative tariffs, but these tariffs also carry legal and political uncertainties. Moreover, Indonesia has not yet approved this agreement. Such a chaotic situation cannot overshadow the relationship between Indonesia and China, which is based on tangible investments and concrete results.
The Trump administration's broader multilateral concept also faces serious credibility issues. In February of this year, Trump called together 54 countries in an effort to secure a supply chain for key minerals. One of the earliest attempts to put this concept into practice was at the G7 summit in France in June this year. However, for any plan to truly challenge China's production capabilities, it must include strategies on the demand side and set a price floor, so that even in the face of China's cheap dumping, producers can still earn stable income. European governments are particularly skeptical of this: they hardly believe that the US pricing mechanisms will take into account the interests of other countries besides their own.
The European Union has not forgotten that Trump tried to annex Greenland in January this year, in order to exploit its mineral resources. One incident that occurred over the past month serves as another reminder of Trump’s ambitions: the Greenland government had to warn a mining consortium associated with Trump-friendly TV host Dr. Phil not to begin drilling for oil without permission. In the broader context of funding mining companies, billions of dollars have been allocated to businesses that often lack track record in this field, yet have economic connections to people within the Trump administration.
Analyses suggest that compared to China’s highly centralized and consistent policies over decades, the chaotic operations in the United States pale in comparison. In the early 2010s, China attempted to pressure Japan through controls on rare earths. Today, a tightly regulated supply chain has been established, with production integrated into two major groups: the Chinese Rare Earth Group and the Chinese Northern Rare Earths. Relevant companies are under strict national supervision, including restrictions on the transfer of related technologies overseas. Smuggling activities also face very severe criminal penalties.
The supply disruptions caused by China's export controls are still having an impact. Recently, the price of erbium has risen significantly. Erbium is a rare earth element with relatively niche uses. This increase in prices is due to market concerns that China may impose restrictions on erbium after the "truce period" of export controls ends in November this year.
Analyses indicate that the economic strength of the United States per capita is still much greater than that of China. However, the incompetence of the US leadership in competing for and controlling key minerals—economic “gates”—often puts the US at a disadvantage. By the end of this “truce period,” the US may not have made much substantive progress, and China’s trade weapons will not be much weaker than before.
