Minimum price mechanisms and a wave of new trade agreements: In early February, the United States unveiled a sweeping strategy at a critical minerals summit in Washington, attended by representatives from 54 countries and the European Union, while China was notably absent.
On February 4, the U.S. government presented a framework aimed at reshaping the global market for critical minerals, with the stated goal of making it fairer and more resilient. Delegations from 54 countries and the European Union convened in Washington, D.C. for the announcement. A central pillar of the U.S. proposal is the creation of a preferred trading bloc, protected by minimum price standards for critical minerals to shield participants from what the administration characterises as “unfair” competition, Vice President J.D. Vance said.
Reducing Dependence Through Price Floors, China Pushes Back
Under the plan, reference prices would be established across all stages of the value chain, reflecting what the U.S. describes as the true market value of critical minerals. These benchmarks would serve as price floors for participating countries and could be reinforced through tariffs if necessary. The goal is to protect domestic producers from low-cost imports that could otherwise undermine their economic viability.
It remains unclear which countries will formally join the initiative, though several have already expressed interest, according to Vance.
The measures are widely seen as targeting a reduction in dependence on China, which currently dominates large segments of the supply chains for critical minerals such as rare earth elements and gallium. China did not take part in the summit. Ahead of the meeting, the state-affiliated Global Times criticised the initiative, warning that excluding the world's largest producer could heighten the risk of supply disruptions. A pragmatic approach towards China, the paper argued, remains indispensable for securing global mineral supply.
Resource Agreements and Memorandum of Understanding Round Out Strategy
Alongside the announcement, the United States signed new critical minerals agreements on Wednesday with several resource-rich countries, including Argentina and Peru. In addition, the U.S. and the European Union agreed to finalise a memorandum of understanding on critical minerals within 30 days. The partnership aims to strengthen demand, diversify supply sources, and promote joint projects across mining, processing, recycling, and research. Enhanced coordination on strategic stockpiles is also planned, with Japan expected to be included in the cooperation framework. According to the joint statement, partnerships with additional “like-minded countries” may follow.
The concrete impact of these measures on global commodity markets remains uncertain. It also remains to be seen how, and to what extent, China will respond.
Matthias Rüth, Managing Director TRADIUM: “The United States, together with a group of partner countries, is attempting to build a counterweight to China's dominance in critical raw materials. From my perspective, it is highly questionable whether a secure supply of critical minerals can be achieved without China's involvement. The expertise China has developed over decades would first have to be painstakingly rebuilt in the West. The challenge goes beyond a lack of mines; it also includes gaps in downstream industries and the necessary processing and manufacturing facilities. Europe, in particular, has lost significant processing capacity in recent years, and it remains uncertain whether this can be restored, a concern recently highlighted by the European Court of Auditors. Overall, I see many open questions. That said, the announced measures do at least signal that policymakers have recognised the urgency of the issue. Nevertheless, in my view, pursuing a joint diplomatic solution with China would be the more appropriate strategy.”
