Highlights

• Trump's tax proposal could eliminate Section 45X tax credit, jeopardizing domestic critical minerals production.
• Proposed bill risks ceding mineral production advantage to China's state-backed mining industry.
• Industry leaders warn the tax credit repeal could cause bankruptcies in US rare earth and strategic mineral ventures.

President Trump’s new tax and spending proposal—The One Big Beautiful Bill Act—could inadvertently sabotage America’s push for critical minerals independence, according to industry leaders and Reuters analysis.  This is not what we need now, given our recent experience with serious shortfalls in rare earth elements, which threaten key industries such as the auto and defense sectors.

At issue is the proposed repeal of the Section 45X tax credit, a 10% production incentive established under the 2022 Inflation Reduction Act to support the domestic mining and refining of critical minerals, including nickel, cobalt, lithium, and rare earth elements. While the bill aims to dismantle subsidies for green energy, it lumps together wind, solar, and strategic mineral projects, despite their distinct national security roles.

Industry stakeholders warn that the rollback could cripple U.S. rare earth ventures, making it nearly impossible to compete with China’s state-backed mining juggernaut, which continues to flood global markets with underpriced supply and use its export dominance as a form of geopolitical leverage.

“This credit isn’t about green subsidies—it’s about survival,” said KaLeigh Long, CEO of Westwin Elements. “Without it, U.S. producers will fold. We’re already seeing bankruptcies.”

The House-passed version eliminates the credit to fund broader tax cuts, drawing praise from fiscal conservatives but alarm from defense and industrial policy advocates. The Senate is now debating the measure, with no analysis yet from the Congressional Budget Office on long-term impacts to U.S. supply chains.

So, as cited in Reuters a couple of days ago, Trump’s tax overhaul could leave American critical minerals projects stranded just as geopolitical pressure mounts. Investors should monitor whether the Senate restores 45X or risks ceding ground permanently to Beijing.