Trump’s tariff policy ignores the fact that the US economy is highly dependent on imports of rare metals. Tariffs on these goods, therefore, risk leading to an economic collapse in the US. If Trump wants to save the US from a financial sinkhole, he should tear down his ill-conceived policies if he wants to make the US Great Again.
By Hedi Bel Habib, Independent commentator, Doctor of Philosophy, researcher with long experience of analytical work in government, including 15 years in the Cabinet Office.
The US is extremely dependent on rare metal imports
The US relies heavily on imports to meet its needs for critical minerals. These include nickel, cobalt, copper and lithium – essential components for both industry and defence.
In 2024, the United States relied on China, Malaysia, Japan and Estonia for 80% of its critical mineral needs, according to the USGS. The United States has only one functioning rare earth mineral mine, owned by MP Materials.
At the same time, the US has one of the world’s slowest processes for opening new mines. According to existing analyses, it can take up to 29 years to start a mine in the country, which is the second slowest in the world. At the same time, China dominates the global production and processing of critical minerals, making the US dependent on foreign suppliers.
Counter-tariffs could lead to systemic collapse in the US
China has already announced that it will impose tariffs on seven types of rare earth minerals on which the US is extremely dependent. China is the world leader in rare metals, refining 90% of the world’s total production.
This means that China can already hamper the development of sectors such as defense, technology and the green transition. It is not just economic development that is being damaged. A shortage of these rare metals means that the US’s most advanced defense systems risk going from superior to obsolete.
The US defense industry has a growing need for critical minerals. To meet this, the US is trying to secure supplies by laying claim to Greenland or a forced agreement with Ukraine.
According to the US president, the Ukraine peace talks concerns rare earth minerals worth $500 billion, among other things. However, according to commodity experts, Ukraine lacks mineable rare earth minerals.
Greenland’s resources are also significantly lower than those of China, the biggest US importer. Data from the United States Geological Survey (USGS), shows that China is the world’s largest producer of critical metals and has the biggest rare earth mineral reserves – which as a result means that many countries across the world rely on China to meet their supply and demand for rare earth minerals.
China’s restriction on rare earth mineral exports not only affects the United States, but also causes structural damage to the entire world economy, as rare metals are used in radar, lasers, fighter jets, wind turbines, nuclear power plants, electric cars, electronics, lighting and cancer treatment.
China’s latest move in the trade war to restrict exports of rare earth minerals has the potential to have a major impact on the ability of all countries to produce key products.
Trump needs to do what Einstein did
Albert Einstein said:
“Problems cannot be solved with the same mindset that created them. It takes a completely new way of thinking to solve the problems we created with the old way of thinking”.
Einstein also said that ill-defined problems cannot be solved. If he had one hour to save the world, he would spend 55 minutes defining the problem and the remaining five minutes on the solution.
Trump has not done what Einstein did. He is raising a barrage of tariffs to solve America’s trade problems, without defining the problem itself. If Trump wants to make America Great Again, he should learn from Einstein and reverse his ill-conceived tariff policy. This is the only way to save the US from an economic sinkhole.
Related
- Wang Peng: China Resilient in Facing US Global Tariff War
- Hedi Bel Habib: Trump’s Tariffs is a Lose-Lose Strategy for the Entire World Economy