(Jan 15): US President Donald Trump is holding off on new tariffs targeting imports of critical minerals, following a months-long review to determine whether foreign shipments threatened US national security.
Trump, in a presidential proclamation released on Wednesday following a US Commerce Department investigation, said instead he would seek to negotiate agreements with foreign nations to “ensure the US has adequate critical mineral supplies and to mitigate the supply chain vulnerabilities as quickly as possible”.
Depending on the outcome of those talks, Trump said, he could “consider alternative remedies in the future, including minimum import prices for specific types of critical minerals”.
“The secretary also suggested that it may be appropriate to impose import restrictions, such as tariffs, if satisfactory agreements are not reached in a timely manner,” he added.
Industry watchers for months have awaited the decision from the investigation, launched last April under Section 232 of the Trade Expansion Act, which concluded that imports of processed critical minerals and their derivative products imperiled US national security, citing their importance to a wide swath of defence industries.
But the absence of any immediate tariffs is a signal that the administration is seeking to avoid destabilising a trade truce Trump and Chinese President Xi Jinping agreed to last fall, under which the sides pledged to lower import-tax rates and ease export controls.
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Trump has been under pressure to respond after China, the world’s largest processor of many critical minerals, constrained access to rare earths crucial to advanced technologies during a trade spat last year.
More broadly, the Section 232 authority behind the minerals probe is seen as a way the administration could rebuild its tariff regime if the Supreme Court strikes down Trump’s global levies.
Wednesday’s action may also have implications for uranium, which has growing appeal as the US looks to build out nuclear power rapidly to keep up with the massive power needs for artificial intelligence. The proclamation notes uranium as one of the critical minerals “the energy sector relies on”.
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A major hurdle the administration will need to address, if tariffs are eventually imposed, is the lack of domestic production the US has for most of these raw materials.
Traditionally, trade lawyers have argued that tariffs are needed to protect an existing industry that can prosper with appropriate controls that prevent foreign nations from oversupplying the US market to take down American companies.
Given that China processes more than 80% of the world’s rare earths, and Kazakhstan accounts for the majority of the world’s uranium, it isn’t clear how US companies will benefit as paltry domestic production forces them to rely on foreign supplies.
Uploaded by Isabelle Francis
