The U.S.’s Critical Mineral Crisis: How Trade Wars Threaten the Green Economy

What Makes a Mineral 'Critical'?

Critical minerals are non-fuel resources considered essential for economic and national security due to their role in modern technologies, clean energy systems, and defence infrastructure. The U.S. Geological Survey (USGS) defines critical minerals based on two criteria: 

• economic importance
• supply chain risk

For example, rare earth elements (REEs) like neodymium and dysprosium are vital for wind turbines and electric vehicle (EV) motors. According to the International Renewable Energy Agency 2022 Report: 

Neodymium, praseodymium, dysprosium and terbium are key to the production of the permanent magnets used in electric vehicles (EVs) and wind turbines. Neodymium is the most important in volume terms. 

Gallium nitride and germanium are important for semiconductors and 5G networks. The U.S. relies entirely on imports for 12 critical minerals, including arsenic (used in semiconductors), fluorspar (essential for aluminium refining), and tantalum (critical for electronics). This dependency leaves supply chains vulnerable to geopolitical disruptions, as seen in recent U.S.-China trade tensions.  

The Trump-China Trade War: A Supply Chain Time Bomb

During Trump's first administration from 2017 to 2021, efforts to reduce reliance on Chinese imports through tariffs and trade barriers unconsciously intensified vulnerabilities for the US. While the 2020 Executive Order aimed to revive domestic mining and processing, progress lagged due to regulatory hurdles and underinvestment. China, which controls 70% of global rare earth mining and 90% of processing, retaliated by restricting exports of gallium and germanium in 2023. Gallium and germanium are key minerals for semiconductors and solar panels.  

The Biden administration’s Inflation Reduction Act (IRA) sought to boost domestic clean energy manufacturing, but Trump’s 'proposed' 2025 tariffs (including a 60% levy on Chinese goods) threaten to reignite tensions. Such measures risk triggering further Chinese export controls, destabilising supply chains for EVs, renewables, and defence systems. These proposed tariffs could potentially cost US consumers more than $2,600 per year (equivalent to £1807.05 as of February 5, 2025).

Why Critical Minerals Matter for the Green Transition

The shift to renewable energy sources heavily depends on critical minerals. According to the International Energy Agency (IEA), an offshore wind plant requires approximately thirteen times more mineral resources than a gas-fired plant to generate power. An electric vehicle (EV) needs six times more minerals than a conventional car. Lithium demand is projected to grow by 42 times (or 4200%) by 2040 compared to 2020 levels, if the Paris Agreement to limit the global temperature increase to less than 2°C is to be met. 

China’s dominance in refining and processing over 40% of global capacity for lithium, copper, cobalt, and rare earths means U.S. tariffs or export bans could disrupt decarbonisation timelines. China considers gallium and germanium supplies as resources of national security interest. 

The High Cost of Import Reliance

The USGS reports that the U.S. imports over 50% of its consumption for 43 of 50 critical minerals. Let's break it down with some examples:

(Source: USGS Mineral Commodity Summaries 2024)

China’s strategic use of mineral exports as geopolitical leverage mirrors its 2010 rare earth embargo against Japan. Today its control over gallium and germanium gives it influence over tech sectors. Kevin Klyman, a technology researcher at The Belfer Center for Science and International Affairs, was quoted in the MIT Technology Review to have said following the decision of the Chinese restriction of gallium and germanium in 2023:

Every day the technology war is getting worse. This is a notable day that accelerated things further.

A Diplomatic Path to Reducing Reliance on China for Critical Minerals  

To reduce dependence on Chinese supplies of graphite, lithium, and niobium without rising trade tensions, the U.S. and its allies must pursue a multi-regional partnership strategy that balances domestic investments with global collaboration. This approach avoids confrontational tactics by emphasising shared economic interests and supply chain resilience. 

Graphite and North American & African Collaboration

While the U.S. is advancing a domestic project in Alaska, partnerships with Canada, home to North America’s largest graphite producer, Northern Graphite, could offset immediate shortfalls. Engaging countries like Madagascar and Mozambique (with untapped reserves) diversifies supply chains geographically. 

Lithium: Pacific & South American Alliances

Domestic lithium projects in Nevada and North Carolina are critical for U.S. supply, but matching these with Australia's lithium expertise and Argentina's lithium reserves creates tri-continental supply chain diversification. Australia's stable mining sector aligns with the Minerals Security Partnership, a U.S.-led coalition of nations working to secure critical mineral supplies. 

Niobium: Brazilian Dominance & Global Exploration

Brazil's control of approximately 90% of global niobium production makes it a key partner. Strengthening ties with Brazilian producers, while investing in domestic exploration, ensures long-term stability and supply diversification. Canada, producing about 8-10% of global niobium, offers an additional source.

Cross-Cutting Strategies

• Recycling Innovations: Advancing battery recycling technology reduces dependence on virgin materials. European initiatives, such as the partnership between Aurubis and Talga, are pioneering a process to develop battery-grade recycled graphite anode product from lithium-ion batteries. This collaboration aims to leverage Aurubis' expertise in extracting valuable materials from spent batteries and Talga's graphite processing and anode-making technologies to create a circular solution that meets growing demand for recycled graphite in battery manufacturing.
• R&D Collaboration: Research and development efforts, including those focused on silicon anodes, are underway globally to create alternatives to graphite in lithium-ion batteries. Companies like Sila Nanotechnologies (working in partnership with BMW to develop next-gen batteries) are leading these developments, which could potentially reduce reliance on graphite. While international collaborations are common in advanced battery technologies, specific joint R&D ventures between the U.S., Japan, and South Korea focused on silicon anodes are not widely documented. However, such collaborations could enhance the pace and impact of these innovations, potentially disrupting China's dominance in the graphite market.
• Policy Support: The Inflation Reduction Act (IRA) incentivises local EV battery supply chains. The US Department Of Energy (DOE) Foreign Entities of Concern (FEOC) guidance aims to encourage diversified and resilient EV supply chains by clarifying the restrictions on clean vehicle tax credits related to foreign entities of concern. 

Why This Works

This strategy mirrors China's approach of nurturing international collaborations for shared economic benefits. By establishing regional centres of production (e.g., North American graphite, South American lithium) and leveraging global initiatives like the Minerals Security Partnership, the U.S. can gradually reshape supply chains, minimising the risk of trade conflicts.

The Association of Southeast Asian Nations (ASEAN) plays a significant role in regional economic integration and security cooperation. Its success in diversifying regional trade networks demonstrates how multiple partnerships can enhance resilience. The U.S. can apply this principle by balancing domestic industrial goals with diplomacy, ensuring strategic engagement with key partners. 

Reducing reliance on China isn’t about isolation but building resilient, equitable networks. By combining domestic investment with global partnerships, and framing efforts around shared growth, the U.S. can secure critical minerals without sparking trade wars. As the Minerals Security Partnership demonstrates, cooperation is key to long-term supply chain stability. This collaborative approach not only secures resources but also promotes a more stable global economic environment.

A Sustainable Future Requires Mineral Diplomacy 

The green economy cannot succeed without stable critical mineral supplies. Yet, as Trump’s tariff proposals and China’s export restrictions reveal, weaponising trade risks stalling the energy transition. The U.S. must prioritise cooperation over confrontation, investing in domestic capabilities while strengthening alliances to build resilient, ethical supply chains. This approach aligns with broader principles of international cooperation, which are crucial for navigating complex geopolitical challenges and ensuring a sustainable future. 

The clock is ticking: By 2030, global mineral demand for clean tech could exceed current production. The path forward for the green economy isn’t just about securing resources. We must redefine geopolitics.