The Trump administration’s recent official guidance on supply chain vulnerabilities related to critical minerals reached a striking conclusion. US policymakers are acknowledging that the United States cannot achieve mineral security alone, in terms of accessing ore deposits and processing capacity, which is the true bottleneck China controls. Diversification will require coordination with US allies, including ongoing discussions of Western price floors, to erode China’s dominant position.
The administration’s investigation was carried out last year under Section 232 of the Trade Expansion Act of 1962, which focuses on national security vulnerabilities. It concluded that imports of processed critical minerals and their derivative products “threaten to impair” US national security by leaving key industrial and defense supply chains overly dependent on foreign sources, particularly for processing capacity that the United States lacks.
This is not the first such signal of the need for international cooperation from the Trump administration.[1] The United States previously established critical minerals agreements with Australia, Saudi Arabia, and several Southeast Asian countries among others, in addition to minerals-for-security deals with the Democratic Republic of Congo and Ukraine. But the 232 proclamation makes it official that this international partnership approach will be the centerpiece of US mineral security strategy.
The proclamation, issued in January, directs the secretary of commerce and the US trade representative to negotiate agreements with trading partners to adjust those imports—including considering minimum import prices (a price floor) or other trade-restricting measures—with further action possible. The United States is actively negotiating with several countries to establish minimum price floors that would guarantee profitable margins and make a more sustainable business case for investment.
The diagnosis of the problem is largely correct: Not just the United States, but the world, is dependent on China for large shares of critical mineral–related exports, providing China with significant geopolitical leverage. Demand for many critical minerals is accelerating rapidly, driven by a perfect storm of electrification, the artificial intelligence (AI) and data center boom, the rearmament and defense industry surge coming with expanded North Atlantic Treaty Organization (NATO) spending targets, and increasing geopolitical risk more broadly. If this coordination fails, the result would not simply continue Chinese leverage over minerals markets but also constrain other countries’ capacity to produce semiconductors, energy systems, and defense materials, leaving them vulnerable to potential future Chinese supply disruptions.
The difficulty facing US, and by extension, Western critical minerals strategy is not primarily one of resources or capital but of credibility and the challenge of sustaining cooperation with allies. Diversification at scale requires allies to accept near-term costs—in the form of higher input prices—to reduce dependence on China by coordinating their supply chains and procurement more closely with those of the United States. But for the first time in decades, US political stability and policy continuity are themselves part of those allies’ risk calculations.
Gallium as an example
Gallium—a key input for high-frequency, radar, and satellite semiconductor systems and one of the critical minerals named specifically in the 232 investigation—is a useful example of both how China dominates this supply chain and why diversification will require international collaboration among like-minded countries.
Gallium is imported as both a refined metal and also as embodied in gallium arsenide wafers, the base material for high-frequency and optoelectronic semiconductors. In 2024, US final demand for gallium was just 19 metric tons, roughly 2.5 percent of global production. China accounted for about 99 percent of primary gallium output while operating at only three-quarters of its estimated production capacity. Crucially, gallium is not mined directly; it is recovered as a trace byproduct of bauxite and zinc processing.
The United States cannot quickly build a stand-alone gallium supply chain, because it no longer operates the industrial systems from which gallium is cheaply recovered in the first place. Although the United States still smelts aluminum and refines zinc, it does very little of the upstream alumina and residue processing where gallium recovery is concentrated, and it does so at a scale far below even secondary gallium producers, such as Korea or Japan. And even if the United States were to produce gallium, production costs would likely be multiples of those in China and economically uncompetitive abroad.
Gallium illustrates a broader point: Critical mineral resilience is not just about geology or permitting but also about achieving an economically viable scale of production. Partnerships matter because they allow countries to pool the upstream mining and processing ecosystems and industrial scale that determine whether critical minerals—whether mined and processed directly or recovered as byproducts—can be produced at a commercially viable cost.
In 2022, I argued against a European Commission initiative to cooperate on pricing and encourage investments in critical minerals, which became known as the “Brussels Buyers Club.” But prices were then at record highs, and the focus was on more widely produced and consumed energy transition minerals, such as lithium, cobalt, and graphite. I contended then that collusive purchasing arrangements would work against expanding supply. But for materials and derivative products where final demand is small, margins are razor-thin, and prices are too low rather than too high, the logic of coordination (and market protection) is more persuasive. For most small-volume critical minerals, viable supply chains not reliant on China are unlikely to materialize without coordinated government intervention. And even with government intervention, the West will still face significant challenges establishing price targets across dozens if not hundreds of raw and processed materials and derivative products and a high-quality but low-volume pipeline of mining and minerals talent development.
With friends like these
The US administration’s 232 proclamation references trading partners. It does not reference allies or “friendly and like-minded” countries. This is telling. Via the G7 and other fora, US allies are being asked to accept short-term costs above prevailing market (i.e., China) prices to reduce dependence on China. But they are also increasingly having to consider whether deeper integration with the United States now carries its own political risk.
US policymakers recognize it will take expanded scale and collective action to diversify critical mineral supply chains, as do US allies. The whole rationale for coordinated Western price supports is as a hedge against geopolitical risk, specifically the weaponization of export restrictions by China, the leading producer of refined product. As the largest Western economy with the deepest capital markets and defense industrial base, the United States would be pivotal. But for US allies, this strategy comes with considerably more risk than it would have in previous decades, and the call is coming from inside the house: The United States is a growing source of geopolitical risk.
The strategy presumes “the West” is a coherent bloc defined by political and economic alignment around shared goals. That presumption is growing less and less defensible. Less than a month ago, NATO forces were deploying to Greenland to deter the possibility of a US incursion, justified in part by the island’s critical mineral resources, even as Europe continues to manage an active war on its eastern border. The United States’ overseas interventions and military actions of the last year are raising doubts among the leading industrial democracies in the G7[2] over the reliability of partnering with the United States. To many, the United States is looking more and more like the illiberal regimes in Hungary, Poland, and Turkey. Nowhere is this lack of trust more apparent than in trade relations. The United States has imposed unilateral tariffs on friends and foes alike, despite free trade among allies making alliance partners more productive and dynamic, strengthening collective defense and deterrence.
The risk is whether the United States can credibly sustain a multi-year strategy requiring coordinated investment, protected markets, and price supports. For countries and companies being asked to restructure parts of their mining and processing ecosystems around US-led coordination, the very real possibility of abrupt policy shifts, budgetary gridlock and government shutdowns, or administrative reversals and paralysis is now part of the calculation. This volatility helps explain why prominent EU voices, Japan’s bilateral supply agreements, and Canada’s independent mineral strategy all emphasize diversification that does not rely exclusively on US-led coordination.
A Western price floor or other coordinated interventions will only work long-term if the coordinating countries represent a large enough share of demand and have deep enough capital markets to make supply chains outside of China commercially viable at scale. The United States provides a lot of both: outsized demand in semiconductors, aerospace, defense, and energy systems that use precisely these small-volume, high-value minerals, and the financial depth to underwrite long-horizon mining and processing investments. At the same time, the United States is becoming a bigger driver of geopolitical risk and systemic uncertainty. US allies are being asked to price in Chinese risk while increasingly having to also price US risk into their diversification strategies. Whether they conclude that this trade is worth making and sustaining is now an open question.
Notes
1. The Biden administration established the Mineral Security Partnership—a transnational coordinating mechanism for widening critical mineral supply chains—and the Inflation Reduction Act (IRA) provided tax credits for critical minerals mined or processed in countries with free trade agreements with the United States. The Mineral Security Partnership has been removed from the US State Department website, and many of the tax credits in the IRA are set to sunset in 2031 (a very short time in mining and mineral processing).
2. The G7 consists of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, with the European Union as a significant participant in talks but without hosting duties or a rotating leadership spot.
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