US President Donald TrumpImage Credit source: AI generated
US President Donald Trump has directed allied countries and trading partners to make agreements for the supply of important minerals and rare earths within 180 days. According to South China Morning Post, if these agreements are not reached within the stipulated time, America has warned of imposing tariffs and trade sanctions.
In an announcement, Trump said that America’s dependence on critical minerals processed in foreign countries is a threat to national security. Critical minerals like lithium, cobalt and rare earth elements are essential for advanced manufacturing, defense systems, semiconductors and clean energy technologies. At present, China has dominance in the processing of these minerals. China accounts for more than 70 percent of the world’s rare earth refining and battery-grade mineral production.
Most important for auto sector
This step shows the need to build a strong supply chain for the auto sector, as the demand for electric vehicles (EV) is continuously increasing. Companies may need to renegotiate their contracts, find new sources of minerals and change production strategies according to new trade rules. Although this has been described as a step related to national security, but its impact will be on the entire automobile value chain, from battery manufacturing companies to car manufacturers. This may also affect the price of vehicles, production timeline and long-term investment in electrification.
set time for conversation
Under this directive, US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick have been given the responsibility of making new or expanded agreements regarding the import of processed minerals and products made from them. The deadline for negotiations has been set till July 13, 2026, so that legally binding agreements can be made. Although the declaration does not clearly state that mining and processing of minerals should take place outside hostile countries, emphasis has been laid on removing the supply chain from large and one-sided sources.
Trump threatened to impose tariffs
The steps outlined in the announcement include increasing processing capacity in partner countries, entering into long-term supply agreements to ensure US access, promoting investment in units outside China, and trade stabilizing measures such as minimum prices to avoid price fluctuations. If no agreement is reached within the stipulated time frame, Trump will have the right to take strict measures without any additional review. This includes imposing higher tariffs, quotas or minimum import prices.
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