Hindsight is 20/20, and the president now has a tentative solution to last year’s minerals snafu with China: a strategic reserve.
This probably could have been handled sooner. Way back in 2019, China dropped not-so-subtle hints that it might retaliate against Trump 1.0 era trade restrictions by withholding minerals crucial to modern manufacturing—things you’ve probably never heard of like dysprosium, terbium, indium and yttrium. If you have an iPhone, perhaps you’ve heard that there’s tungsten in it. You’ll never guess where tungsten comes from.
About five years after that, in spring of last year, shortly after Trump went for a second helping of trade war with China, China made good on its threat and added those very rare earth metals to its export control list.
Since China’s massive mining sector gives it control of 69% of the production for these minerals, and since U.S. manufacturers started shutting down operations amid the restrictions, there wasn’t much Trump could do other then offer concessions, so he lowered the tariffs.
The White House press release about the deal called it, “a massive victory that safeguards U.S. economic strength and national security while putting American workers, farmers, and families first.” But it was actually embarrassing for Trump and generally regarded as a win for China.
So, according to Bloomberg, Trump announced plans on Monday to create a $12 billion stockpile of these minerals in order to prevent this from happening again.
“Project Vault,” as the venture is named, sounds like it is currently a stockpile of money—$2 billion provided by private capital, along with a $10 billion bank loan.
The purpose of the project is to give manufacturers a lifeline in the case of some event that causes a price shock. Companies will commit to buy rare earth minerals ahead of any such shock at some specific price. In the meantime, Project Vault will have to actually find and store all these minerals. Project Vault holds that inventory, and manufacturers can draw material against their allotment when necessary, but that will come with the obligation to replenish the stockpile afterwards.
“We don’t want to ever go through what we went through a year ago,” Trump said, according to Bloomberg. That checks out.
