US pushes allies to pay more for critical minerals to cut reliance on China

The US is stepping up efforts to reshape how critical minerals are sourced, with its top trade official signalling that allies may have to accept higher prices if they want more secure supply chains.

Jamieson Greer has told partner countries that reliance on low-cost imports has contributed to the West’s dependence on China, particularly in areas like rare earths. In conversations with allies, he has argued that a shift away from that model will come with added costs, something he described as a “national security premium”.

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The idea being discussed goes beyond just sourcing changes. Washington is looking at forming a group of like-minded countries, including parts of Europe, that would trade critical minerals among themselves, potentially at agreed minimum prices. The aim is to make mining and processing outside China more viable, while reducing the risk of supply disruptions.

Greer has suggested that concerns about rising costs are part of the problem itself. According to him, the focus on cost efficiency over the years is what allowed China to build such a dominant position in the sector.

The proposal is already raising questions among some US allies. There are worries that introducing price floors or similar mechanisms could increase costs for industries that depend heavily on these materials, including defence, automotive and clean energy. Some officials are also concerned about how China might respond, especially if new trade barriers are introduced.

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China has spent decades building its position in critical minerals, from mining through to processing, and has previously used export controls to restrict supply. That experience has pushed the US to prioritise securing alternative sources, particularly after disruptions in rare earth shipments last year.

Earlier this year, countries including Japan and members of the European Union signalled interest in working together on mineral supply chains, including exploring coordinated trade approaches.

Still, turning that into a workable system, especially one that balances security concerns with rising costs, is likely to take time.

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