Highlights
- Trump’s potential policy changes may reduce U.S. electric vehicle and green technology commitments, potentially affecting rare earth element demand.
- Global rare earth markets remain resilient due to international climate commitments, particularly from China and EU countries.
- Strategic importance of rare earth elements in defense and technology sectors could continue to drive domestic supply and research initiatives.
With a new U.S. President, the returning Donald Trump for his second non-consecutive term, what policy changes may impact the rare earth materials market?
The United States participates in various international environmental agreements and accords, many of which address global issues like climate change, biodiversity, and pollution. According to the General Accounting Office (opens in a new tab), the United States is bound by five international environmental agreements related to climate change (Framework Convention), desertification (Desertification Convention), the earth’s ozone layer (Montreal Protocol), endangered species (CITES), and North American environmental cooperation (North American Agreement).
Moreover, the Biden-Harris administration, now on its way out, announced a series of private and public sector investments in electric vehicles. Specifically, President Biden’s Investing in America Agenda involved what the White House cited in 2023 as a manufacturing and clean energy boom and accelerating the production of affordable electric vehicles.
Biden had a goal of having 50 percent of all new vehicle sales be electric by 2030, while the White House last year announced the public and private commitments to support America’s historic transition to electric vehicles (EV) under the EV Acceleration Challenge. These commitments were part of President Biden’s Investing in America (opens in a new tab) agenda to spur domestic manufacturing, strengthen supply chains, boost U.S. competitiveness, and create good-paying jobs. Because of Biden’s leadership and historic investments, electric vehicle sales according to the Whtie House last year tripled and the number of publicly available charging ports has grown by over 40 percent since he took office. There are now more than three million EVs on the road and over 135,000 public EV chargers across the country.
But all that will change come next year when Donald Trump and JD Vance step into power.
Trump has left doubt that he will try to unleash a wave of new gas and oil drilling while he will most certainly drop any Biden-focused electric car totals.
So, what does this mean for the rare earths as Trump and his administration start to execute on these policies?
Will Rare Earths be Hit?
If Donald Trump or any U.S. administration were to scale back commitments to climate accords or electric vehicle (EV) mandates, it could indeed impact the rare earth elements (REE) market, although the effects would likely be nuanced.
Rare Earth Exchanges considers the following factors to consider:
| Factors | Summary |
|---|---|
| Reduced Demand for EVs and Green Tech | Many rare earth elements, such as neodymium and dysprosium, are critical for electric motors, especially those used in EVs and renewable energy infrastructure like wind turbines. Scaling back EV mandates or relaxing climate targets could slow down the growth of the electric vehicle and renewable energy sectors in the U.S., potentially reducing the demand for REEs. However, given global commitments (particularly from the EU and China), the overall global demand may still see growth, albeit at a possibly slower rate in the U.S |
| Global Market Influence | The REE market is globally interconnected, and even if U.S. demand shifts, other countries, particularly in Asia and Europe, are increasing their focus on electric vehicles and renewable technologies. China’s aggressive green policies and dominance in the rare earth market could mean that reduced U.S. demand may have limited impact on global prices. Moreover, demand from these regions might buffer any drop in the U.S., maintaining relatively stable global demand for REEs |
| Gov may still support | Even if federal support for green initiatives wanes, there is bipartisan recognition in the U.S. of the strategic importance of securing a stable domestic supply of REEs, given their importance in defense and technology industries. Initiatives aimed at domestic rare earth mining and refining could still proceed, driven by a focus on reducing dependence on Chinese REE supply chains, a key issue beyond climate policy. |
| Potential Effect on Investment and Innovation | Reduced regulatory support could dampen private investment in green technologies within the U.S., which may indirectly affect REE companies. If there’s less urgency to innovate around REE use in renewable tech, the pace of research on substitutes or efficiency improvements might slow, potentially affecting REE demand growth. |
In summary, while a shift away from green policies in the U.S. might influence rare earth demand locally, global commitments and strategic priorities would likely keep REE demand relatively resilient. The ultimate effect on the REE market would depend on the balance of U.S. policies versus continued international green energy momentum.
Daniel
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