President Donald Trump has elected to temporarily suspend plans for tariffs on critical minerals including rare earth elements and lithium. Instead, he has ordered his administration to prioritize discussions with international trading partners in an effort to develop cooperative solutions following a security-focused investigation.
The decision follows the completion of a Section 232 inquiry conducted by Commerce Secretary Howard Lutnick that identified alarming levels of U.S. dependence on foreign sources for processed critical minerals and their derivatives. This reliance on external suppliers poses serious risks for key industrial sectors essential to national defense and advanced technology development.
The White House reported that the United States is completely reliant on imports for 12 critical minerals and more than 50% reliant for an additional 29 minerals. This fragile supply situation exposes vital industries to potential disruptions and price instability.
National Security Implications
The administration has labeled this dependence as a pressing national security vulnerability, which could be exploited by adversarial foreign actors. Critical minerals are indispensable components for defense systems, energy infrastructure, and cutting-edge technologies.
Rather than imposing tariffs immediately, President Trump instructed Commerce Secretary Lutnick and U.S. Trade Representative Jamieson Greer to liaise with global trading partners to seek mutually agreeable solutions. These conversations are anticipated to focus on frameworks such as price floors for critical minerals—a concept gaining support among Western mining interests and policymakers. Notably, these proposals have recently featured in discussions among G7 finance ministers and officials from countries including Australia.
If these diplomatic efforts prove unsuccessful, the administration has left open the option to pursue further measures. Reuters has reported that President Trump may consider instituting minimum import prices on critical minerals or exploring alternative regulatory actions to mitigate risks to supply chains.
Challenges in Domestic Production and Processing
Lutnick’s report emphasizes that mining critical minerals domestically does not automatically ensure supply chain security if the United States remains dependent on foreign entities for refining and processing operations. Although the U.S. ranks as the second-largest global producer of mined rare earth oxides, its limited refining infrastructure means that much of its mineral output is exported for refinement abroad before being re-imported as finished materials.
China’s dominance exacerbates the issue, accounting for a leading share of global production and refining capacity for over half of the 54 minerals classified as critical by the U.S. Geological Survey. Heightened trade tensions have led Beijing to restrict exports of certain minerals in the past year, intensifying concerns about reliance on a single major supplier amid geopolitical frictions.
President Trump’s directive explicitly recognizes the strategic peril posed by this dependence. He stated, "Mining a mineral domestically does not safeguard the national security of the United States if the United States remains dependent on a foreign country for the processing of that mineral."
Rising Demand Amid Declining Domestic Capacity
The report also highlights a troubling outlook: the capacity for refining, manufacturing, and producing critical minerals domestically has been declining, even as U.S. demand is climbing swiftly. Factors driving this growth include expanding defense requirements, the proliferation of data centers, developments in nuclear energy, and the emergence of new energy technologies.
This imbalance underscores the urgency with which the administration is addressing supply security for these minerals and materials. President Trump has mandated that Secretary Lutnick and Trade Representative Greer provide progress updates on their negotiations within 180 days. Concurrently, the administration will continue to monitor import levels and is prepared to implement tariffs or other measures should diplomatic talks fall short.