Critical minerals have officially entered the tariff spotlight. On Tuesday, US President Donald Trump signed an executive order launching an investigation under Section 232 of the Trade Expansion Act of 1962 to determine whether critical mineral imports impair US national security. The Commerce Department investigation will help determine whether and to what extent the Trump administration will levy tariffs on imports of critical minerals as part of its sweeping global tariff efforts.
The United States is over 50 percent import-reliant on forty of fifty designated critical minerals. With China dominating many mineral supply chains from extraction to processing to finished products, US policymakers have spent years trying and largely failing to effectively de-risk supply chains. US critical mineral suppliers face a complex set of challenges: volatile and opaque price signals, Chinese market manipulation through subsidies and dumping that undercut other projects, and the inherently higher costs of US projects due to stricter environmental and labor standards.
Now, the Commerce Department has 180 days to assess how imports create vulnerabilities in US critical mineral supply chains, investigate foreign market distortion, and strategize how to boost domestic processing. Tariffs could be highly effective tools in addressing these challenges—but optimal results require a scalpel, not a chainsaw.
After all, at the heart of the US critical minerals challenge lies project economics. The administration can streamline permitting processes and prioritize mining on federal land, but investment will still struggle to reach the levels needed for a robust domestic mining sector without increased market certainty. De-risked supply chains need massive capital investment, which only flows when investors can count on predictable returns, reliable and cost-competitive contracts for securing future inputs (intake) and outputs (offtake), and consistent federal support.
Mineral tariffs should be precise and predictable
As the government investigates how tariffs can strengthen domestic supply chains, strategic floor tariffs should be top of mind. Setting price floors through tariffs can directly counter Chinese market manipulation and boost producer confidence without reducing incentives to become increasingly cost-competitive.
Precision is critical in these complex and fragile markets. Blanket tariffs across all mineral and metal imports would distort markets and do more harm than good. For starters, the United States simply does not have domestic reserves of many minerals, and tariffs can’t change the composition of the earth’s crust. Even for minerals the United States has in abundance, building up mining and processing capacity is a lengthy process. Recent administration efforts to streamline processes will help, but it will still be years before they bear fruit—leaving the United States exposed as vulnerabilities deepen. Exemptions from blanket tariffs for key allies and free-trade partners would alleviate pressure, but for many minerals, robust alternatives to Chinese suppliers just don’t exist yet.
There are no tariff shortcuts here; hard work and long-term commitment to developing and growing supply chains are prerequisites for success. The question of investor confidence is key. Blanket tariffs exacerbate market volatility, which alone is enough to scare off capital. Instead, tariffs should be used with precision to provide more market transparency and predictability.
How floor tariffs can help de-risk rare earths
Floor tariffs are an ideal tool. Coordinated floor tariffs can diversify mining and processing among strategic partners by de-risking project development, unlocking critical private financing, helping sustain existing mines, and offering a clear signal to invest in new processing initiatives. Floor tariffs effectively function as a form of offtake support that largely pays for itself. Particularly volatile and opaque markets that would benefit most from other forms of offtake support are the best candidates here. The dramatic price swings for critical materials oversupplied by China have grabbed headlines—lithium collapsing 85 percent, nickel up 90 percent, and so on. Despite erratic prices, however, these markets have generally avoided a huge reduction in offtake demand due to their market maturity, sustained demand confidence, or strong US policy support.
Rare earths, however, have largely slipped between the cracks—and present a great opportunity for floor tariffs to have a huge impact. These seventeen elements are key to the permanent magnets, heat-resistant coatings, and other high-tech components that keep missiles precise and data centers humming. Since rare earths are often secured as byproducts of other mining activities, extraction and processing have particularly high upfront costs and long development timelines. With investor confidence low and demand signals unsteady due to manipulated prices, demand guarantees are key to catalyzing rare earths retrieval projects, while supply confidence is crucial to incentivizing new rare earths separation facilities.
Notably, the United States has one active rare earth mine in Mountain Pass, California—but it has historically sent its raw materials to China for processing since it could not process locally cost-competitively. The mine’s new owner, MP Materials, aims to ramp up production and send its outputs to a new refining and magnet facility in Texas that will supply General Motors. This is an important first step to reducing dependence on Chinese processors, which currently produce over 90 percent of the world’s refined rare earths—yet the Texas facility is only expected to produce in a year what China produces in a day at full capacity. With Chinese restrictions on rare earths and permanent magnets progressively tightening, it is crucial to give companies the confidence to help address this strategic vulnerability.
No quick fixes
While floor tariffs on rare earths can help secure one piece of the United States’ critical mineral supply chains, the Trump administration should adopt distinct mineral-by-mineral tariff strategies. Lumping all fifty critical minerals into a blanket tariff will likely do more harm to US industry than good. Thoughtful tariff policy needs to be part of a larger conversation about improving the United States’ understanding of relative criticality among the nearly fifty minerals Washington has designated as critical.
Moreover, tariffs cannot successfully improve US supply chain security without a comprehensive suite of supportive policies. Recent efforts to empower the International Development Finance Corporation and use the Export-Import Bank to secure global feedstocks for domestic processing are powerful steps toward US supply chain security, but even more ambitious actions are required. The Trump administration should introduce innovative financing mechanisms, invest in workforce development, and consider establishing a strategic resource reserve. These complementary tools can help tariffs work by ensuring market signals are backed by capital inputs and reliable demand.
Finally, the Trump administration cannot pursue this strategy in isolation. At a moment when partners, allies, and resource-rich nations are similarly eager to develop alternatives to China’s dominance over critical minerals, coordinated tariffs and vigorous supply chain diplomacy—such as crafting mineral deals and investing in mines and refining infrastructure abroad—can be a force-multiplier toward wider supply chain diversification. Not only would this help alleviate stress on minerals that the United States cannot produce affordably or in sufficient quantities, it could also help coordinate technology and knowledge transfer at a moment when allies are entering unfamiliar economic territory.
The turbulence surrounding recent tariff implementation should not scare policymakers away from this tool altogether. When implemented precisely and strategically—such as floor tariffs on rare earths—tariffs can be a powerful force for market stabilization and supply chain security. This Section 232 investigation provides an opportunity to address one of Washington’s most serious strategic vulnerabilities—and the United States can’t afford to squander it.
Reed Blakemore is the director of research and programs at the Atlantic Council Global Energy Center.
Alexis Harmon is an assistant director at the Global Energy Center.
Further reading
Tue, Apr 15, 2025
Central Asia’s geography inhibits a US critical minerals partnership
EnergySource By
Central Asia holds vast critical mineral resources, but limited export capacity and complex environmental, geopolitical, and legal risks make large-scale US investment unfeasible. The US should instead focus its efforts on allied nations with established mineral export industries.
Thu, Apr 3, 2025
Profitability and power: Fixing US critical minerals supply chains
EnergySource By
The global critical minerals race is well underway, and the American supply chain is behind. To regain momentum, the US must make this industry viable by creating a financial framework that attracts and retains capital.
Fri, Mar 21, 2025
Four critical questions (and expert answers) about Trump’s new critical minerals executive order
New Atlanticist By Alexis Harmon, Reed Blakemore
On March 20, US President Donald Trump signed an executive order intended to increase crucial mineral production in the United States. Atlantic Council experts dig into the details.
Image: A mining truck takes ore from the pit to a crusher at the MP Materials rare earth mine in Mountain Pass, California, U.S. January 30, 2020. Picture taken January 30, 2020. REUTERS/Steve Marcus.