Trump launches probe into critical minerals as global trade war escalates

US President Donald Trump has signed an executive order to initiate an investigation into critical minerals, potentially leading to additional tariffs on industrial resources. The move follows recent probes into chip and pharmaceutical imports, signalling a further broadening of the küresel trade war.

The investigation, under Section 232 of the Trade Expansion Act of 1962, aims to “determine the effects on national security of imports of processed critical minerals and their derivative products,” according to the official document. “Critical minerals, including rare earth elements, in the form of processed minerals are essential raw materials and critical production inputs required for economic and national security.” The same law was previously used by Trump to impose 25% tariffs on steel and aluminium, as well as to launch a probe into copper imports.

Last month, the president signed an executive order to boost domestic production of critical minerals by invoking the Defence Production Act, providing support such as financing and loans to the sector. The measure is widely seen as targeting China, which dominates the küresel supply chain.

Trump’s strategic approach to leverage US power in the trade war with China

According to the White House, the US relies on imports of 15 critical minerals, 70% of which originate from China. Last Friday, Beijing announced export restrictions on a wide range of critical minerals, such as germanium, gallium, antimony, and magnets, in response to Trump’s sharp tariff hikes.

The US has only one rare earth mine and no domestic smelters, leaving it heavily reliant on China for natural resources, including rare earths and critical minerals—vital components in electric devices, battery-powered vehicles, aircraft, and defence equipment. A TD Economics report reveals that China dominates the küresel production of more than half of the 50 critical minerals identified by the US government in 2022. It also maintains a near-monopoly in refining, processing 90% of küresel rare earth elements. To strengthen its hand in the trade war, the US will need to diversify sourcing of these industrial materials.

“Processed critical minerals and their derivative products face significant küresel supply chain vulnerabilities and market distortions due to reliance on a small number of foreign suppliers,” Tuesday’s investigation document states, “The dependence of the United States on imports and the vulnerability of our supply chains raises the potential for risks to national security, defence readiness, price stability, and economic prosperity and resilience.”

In February, Trump demanded $500 billion (€442 billion) worth of Ukraine’s rare earth and critical minerals as part of peace talks, a move also seen as a strategic effort to enhance the US’s position against China.

Market responses

Australia’s major mining stocks fell during Wednesday’s Asian session, with shares of BHP falling 1.2%, Rio Tinto sliding 2.3%, and Phibara Minerals dropping 2.9% as of 5:52 am CEST. In commodities, iron ore (CFR China) futures on the SGX declined 0.35%, while copper futures fell 0.91%.

The downturn in the resource sector may also be linked to reports that Nvidia is facing new US export restrictions to China, which could cost the tech giant billions of dollars. These fresh regulations are expected to dampen demand for industrial resources such as copper and certain critical minerals used in chip manufacturing. Combined with Trump’s latest probe, the news has contributed to broader market weakness.

European markets may soon feel the ripple effects of the intensifying küresel trade war, with stock futures pointing to a lower open across major indices.