Highlights

• The US has proposed a critical minerals trading bloc with Japan, the EU, and Mexico.
• The bloc features coordinated trade rules, potential price floors, and project support to counter China's 90% control of rare earth processing.
• Vice President J.D. Vance advocates for enforceable price floors backed by adjustable tariffs to address market volatility.
• Market volatility has made non-Chinese investment 'nearly impossible' in the sector.
• The real bottleneck is midstream processing—not mining—requiring parallel investment in separation, metallurgical expertise, and manufacturing capacity.
• These investments are needed to create a durable industrial strategy beyond stockpiles.

The United States has opened a new front in the critical minerals contest—this time not with tariffs alone, but with a proposal to build a preferential trading bloc among allies aimed at stabilizing prices and weakening China’s grip on supply chains. Unveiled at a Washington ministerial hosted by Secretary of State Marco Rubio, the plan brings Japan, the European Union, and Mexico into early talks on coordinated trade rules, potential price floors, and project support. Singapore’s Foreign Minister Vivian Balakrishnan (opens in a new tab) attended and struck a familiar note—support for open, rules-based trade and resilient supply chains—underscoring both the ambition and the caution surrounding the effort.

At its core, the initiative acknowledges a reality long glossed over: China’s leverage is not just geological. While China accounts for roughly 60% of the rare earth supply upstream, it controls close to 90% of the processing that turns mined material into usable inputs like magnets. That downstream choke point—not ore—confers power. Vice President J. D. Vance was unusually blunt, arguing that volatile prices and alleged market flooding have made non-Chinese investment “nearly impossible.” His prescription—enforceable price floors backed by adjustable tariffs—aims to restore predictability so capital will flow.

There are concrete signals beneath the diplomacy. U.S. trade officials say the U.S., Japan, and the EU intend to conclude a memorandum of understanding within 30 days to jointly support mining, refining, processing, and recycling projects, with a parallel U.S.–Mexico plan to follow within 60 days. Those timelines suggest urgency, not just symbolism.

Yet much remains aspirational. Price floors are politically sensitive and historically fraught; past commodity schemes collapsed when governments promised stability without enforcing discipline or coordinating demand. Details on floor levels, enforcement, and loss-sharing are conspicuously absent. And while more than 50 countries attended, most have not publicly committed—an important distinction, as enthusiasm does not equal alignment, suggests Reuters and Singapore’s The Straits Times (opens in a new tab).

Media coverage has largely framed the proposal as a mining story. That’s misleading. The bottleneck is midstream processing—separation, metallurgical expertise, and downstream manufacturing capacity. Without parallel investment in these segments, a trading bloc risks becoming a talking shop with stockpiles attached, rather than a durable industrial strategy.

Why this moment still matters: senior U.S. officials have now said out loud what investors already know—that price volatility, not geology, is killing Western supply chains. If the next steps deliver enforceable mechanisms and sustained midstream buildout, this could mark a genuine pivot. For now, it’s a credible opening bid—ambitious, necessary, and unfinished.