Jamieson Greer, the United States Trade Representative, said that allied countries must be willing to pay prices above market rates for critical minerals that are extracted and processed outside of China. He called this surcharge a “national security premium,” referring to the West’s need to build supply chains independent of Beijing in order to protect itself from geopolitical uses of supplies, such as sales restrictions.
THE PRICE ISSUE AND THE AMERICAN PATH TO EMANCIPATION FROM CHINA
Currently, China exerts significant influence over the supply chains of most critical minerals for energy, defense, and technology, and consequently over their prices. Control over the value of these raw materials – that is, the ability to raise or lower them through reduced or increased production – allows Beijing to potentially crush Western mining projects, damaging their profitability.
For years, the United States has been trying to reduce its mining dependence on China through the development of supply chains alternative – located in allied, friendly, or nearby countries – and a domestic supply chain. This policy saw further acceleration with the start of President Donald Trump’s second term: the American government even became a shareholder in several mining companies specializing in critical elements, such as USA Rare Earth and MP Materials (rare earths), Trilogy Metals (copper, cobalt, gallium, and germanium), and Lithium Americas (lithium).
DOUBTS FROM AMERICAN ALLIES
Greer wants the United States’ trading partners, including the European Union, to establish minimum price thresholds for critical minerals – the aforementioned “national security premium” – in order to protect their investments in extraction and refining capabilities. He also wants tariffs or other trade barriers imposed on imports of materials from China, to prevent Beijing from manipulating international prices through increased supply.
Not all of the United States’ allied countries are enthusiastic about this proposal, however: they fear it could lead to higher costs for companies using critical minerals, or provoke a trade backlash from China.
GREER’S WORDS ON THE SECURITY OF CRITICAL MINERALS
Greer criticized these positions. In the Financial Times, he said that “when trading partners express concerns about the economic cost of minimum prices or related mechanisms, I simply respond: what you are talking about, that is cost efficiency, is exactly why we are in the current situation”: he refers to the fact that the West became dependent on China for critical minerals precisely because it always preferred the cost-effectiveness of supplies over their security. “All of us,” he added, “will pay a national security premium to have a secure supply chain.”
