Washington | The administration of US President Donald Trump may pressure allied nations to consider imposing tariffs on Chinese rare earths as a way to support new mining and processing projects without offering government-backed price guarantees.
The proposal is expected to be raised at a meeting of US allies in Washington next week, which Australian Resources Minister Madeleine King has been invited to attend. The move would allow the Trump administration to limit one-off bilateral deals with companies that lock in price floors for rare earths and other critical inputs used in defence, energy, and technology industries.
Australian Rare Earths chairman Angus Barker said on Thursday (Friday AEDT) that a Reuters report published earlier this week— which triggered a sell-off among affected ASX-listed miners—may indicate that Washington is exploring alternative solutions to counter China’s dominance in rare earth and other critical mineral mining and processing.
The unconfirmed Reuters report undermined expectations that all US producers would receive access to the same price floor incentive granted to California-based MP Materials in July. Under that agreement, Washington committed to buying key rare earths at a minimum price of $US110 per kilogram, well above prevailing market rates.
“The message of ‘no more bilateral deals’ does not mean the US lacks commitment to establishing durable, bifurcated non-China rare earths pricing,” Barker said. His company is currently exploring a rare earths project in South Australia.
“It simply means the American public purse will not pay for it. Instead, the cost will be spread across the wider Western consumer base by imposing tariff barriers or other restrictions on Chinese supply. This would lift US and Western pricing to levels that incentivise new, diversified and secure non-China rare earth feedstock, metal or magnet production,” he said.
“The US is asking other countries to come to the table so that it is not acting alone and making its industries uncompetitive compared with Japan, Korea and the European Union.”
Next week’s meeting of US allies, convened by Secretary of State Marco Rubio, aims to establish a framework to break China’s dominance over the processing of critical minerals used in smartphones, weapons systems and computer chips. Beijing has repeatedly leveraged this dominance in trade negotiations, highlighting its ability to disrupt global supply chains central to economic security and prosperity.
Rare earths—metallic elements valued for their magnetic and conductive properties—are abundant in the Earth’s crust but costly to extract. They form a subset of critical minerals, a broad category covering commodities of strategic economic importance that are vulnerable to supply chain disruptions.
US Under-Secretary of State for Economic Affairs Jacob Helberg told Bloomberg on Friday that he expects participants at Rubio’s meeting to work towards “agreeing on a price mechanism that we can all coordinate together on in order to ensure price stability”.
While declining to provide further details, Helberg stressed the importance of securing international support. “The key is getting other countries to sign on,” he said. “We’ll definitely make a full-court press.”
Although tariffs have long been a preferred US trade policy tool, China’s control of rare earth supply presents complications, as foreign buyers can continue purchasing low-priced Chinese materials even if the US imposes levies.
To meaningfully erode China’s dominance, allied nations would need to establish a market that excludes Chinese supply and provides producers with sufficient assurance that they will not be undercut or left without buyers willing to pay market prices.
Prime Minister Anthony Albanese has positioned Australia’s mining sector as a key partner in efforts to strengthen raw material supply chains and has taken steps to encourage the development of domestic processing facilities.
As Australian companies are suppliers rather than buyers of rare earths, they would stand to benefit from any coordinated allied effort that lifts prices for non-Chinese supply.
During a White House meeting in October, Albanese and Trump agreed to invest $US3 billion within six months in joint projects across both countries. They also signed a cooperation framework referencing “price floors or similar measures” to shield supply chains from unfair trade pricing. Albanese has additionally pledged to establish a strategic reserve to act as a price stabiliser.
Responding to reports of a potential shift in Washington’s approach, King told Sky News: “We know what we’ve seen in reports, and we will let that play out.
“Every country has its own constraints on government spending. In the United States, there are well-known challenges in getting certain measures through Congress, which we have seen escalate over a number of years.”
She added that this would not deter Australia from pursuing its own critical minerals strategy. “That won’t stop Australia from pursuing our critical minerals strategic reserve program to ensure Australia has access to the resources it needs to build a future made in Australia,” King said.
A report published on Wednesday by US outlet Politico Pro stated that the State Department had asked countries attending Rubio’s meeting to pre-agree to a framework that “mirrors” the one signed by Australia.
However, Barker said the US was primarily seeking commitments from major allied buyers of critical minerals—such as Japan and the European Union—to reduce reliance on low-cost Chinese supply through tariffs or non-tariff barriers, including environmental regulations.
Two weeks ago, Trump signalled potential use of tariffs or other trade measures following an investigation led by Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer into critical mineral supply chains.
Despite this, the administration is expected to proceed cautiously to avoid provoking Beijing ahead of Trump’s planned visit to China in April, where he is scheduled to meet President Xi Jinping.
Gracelin Baskaran, a leading authority on critical minerals policy in Washington, described the Reuters report as “wrong and contradictory” in a LinkedIn post, noting that a January 14 proclamation explicitly referenced price floors as a possible policy tool.
Baskaran, director of the Critical Minerals Security Program at the Centre for Strategic and International Studies, will host Trump, Lutnick and Interior Secretary Doug Burgum for private discussions with industry executives next week, alongside Rubio’s ministerial meeting.
Todd Clewett, a Washington-based adviser to critical minerals companies, said the industry was eager for the US government to move beyond rhetoric.
“The industry would welcome country-level actions and policies that go beyond the individual picking of winners at the company level,” he said.
“The governments involved are on the right track. They have a variety of tools and have carefully considered their impacts—but now is the time to act.”
The administration may also be weighing alternative measures to support pricing. The MP Materials agreement was structured as a contract for difference, under which the government compensates the company if market prices fall below an agreed floor.
Other potential options include long-term offtake agreements, governments acting as buyers of last resort, funding price insurance mechanisms, or discouraging low-cost supply through tariffs.
