As trade disputes between China and the US continue to escalate, US President Donald Trump has decided to target rare-earth minerals, of which 80% of the US’ are imported from the communist country. On Wednesday, the president signed an executive order announcing a national emergency in the mining industry. The executive order will focus on rapidly expanding America’s production of rare-earth minerals, many of which are essential across a variety of domestic manufacturing sectors.
The order will direct the Interior Department to initiate domestic mineral exploration and mine development via the Defense Production Act. The emergency law is nothing new for the President, who previously utilized it to expedite the production of medical supplies during the onset of the pandemic. This latest bid however is focused on terminating US dependence on Chinese rare mineral imports, and ultimately putting an end to China’s dominance in the industry.
This is not the first time that rare-earth minerals have been the subject of trade disputes between the two countries. Last year, the Trump administration feared that China could restrict mineral exports amid heightened trade volatility, and ordered the Defense Department to initiate production of rare-earth magnets.
These magnets are used in a variety of settings including wind turbines, electric vehicles, and missile-guided systems. Last year, China produced a total of 132,000 metric tons of rare-earth minerals, which accounts for 61.9% of total world production. In comparison, the US produced 26,000 metric tons in 2019.
Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.