The Trump administration wants to create a critical minerals trading bloc with its allies that will use tariffs to maintain price floors and defend against China’s tactic of flooding the market to undermine any potential competitors.

Vice President JD Vance said Wednesday that the trade war over the past year exposed how dependent most countries are on the critical minerals that China has a stranglehold on.

“We want members to form a trading bloc among allies and partners, one that guarantees American access to American industrial might while also expanding production across the entire zone,” Vance said at a meeting of foreign ministers at the State Department.

“What is before all of us is an opportunity at self-reliance that we never have to rely on anybody else except for each other, for the critical minerals necessary to sustain our industries and to sustain growth.”

Critical minerals are needed for everything from jet engines to smartphones. China dominates the market for those ingredients crucial to high-tech products.

“I think a lot of us have learned the hard way in some ways over the last year, how much our economies depend on these critical minerals,” Vance said at the opening of a meeting that Secretary of State Marco Rubio hosted with officials from several dozen European, Asian and African nations.

The meeting comes at a time of significant tensions between Washington and major allies over President Donald Trump’s territorial ambitions, from Greenland to Canada, and his moves to exert control over Venezuela and other nations. His bellicose and insulting rhetoric directed at U.S. partners has led to frustration and anger.

The conference, however, is an indication that the Republican administration is seeking to build relationships when it comes to issues it deems key national security priorities.

Meanwhile, Chinese President Xi Jinping spoke with Trump on Wednesday, according to Liu Pengyu, spokesperson for the Chinese embassy in Washington. Details were not immediately available.

To make the new trading group work, it will be important to have ways to keep countries from buying cheap Chinese materials on the side and to encourage companies from getting the critical minerals they need from China, said Ian Lange, an economics professor who focuses on rare earths at the Colorado School of Mines.

“Let’s just say it’s standard economics or standard behavior. If I can cheat and get away with it, I will,” he said. At least for defense contractors, Lange said the Pentagon can enforce where those companies get their critical minerals, but it may be harder with electric vehicle makers and other manufacturers.

Countering China’s critical minerals dominance

Two days ago, Trump announced Project Vault, a plan for stockpile of rare elements to be funded with a $10 billion loan from the U.S. Export-Import Bank and nearly $1.67 billion in private capital.

In addition, the government last week also made its fourth direct investment in an American critical minerals producer when it extended $1.6 billion to USA Rare Earth in exchange for stock and a repayment agreement. The Pentagon has shelled out nearly $5 billion over the past year to spur mining.

Trump’s administration is making such bold moves after China, which controls 70% of the world’s rare earths mining and 90% of the processing, choked off the flow of the elements in response to Trump’s tariff war. The two global powers are in a one-year truce after Trump and Xi met in October and agreed to pull back on high tariffs and stepped-up rare earth restrictions.

But China’s limits remain tighter than they were before Trump took office.

Vance said some countries have signed on the trading bloc, which is designed to ensure stable prices and will provide members access to financing and the critical minerals. He hoped others would agree to after the meeting. Administration officials said the plan will help the West move beyond complaining about the problem of access to critical minerals to actually solving it.

“Everyone here has a role to play, and that’s why we’re so grateful for you coming and being a part of this gathering that I hope will lead to not just more gatherings, but action,” Rubio said.

Heidi Crebo-Rediker, a senior fellow at the Council on Foreign Relations, said the meeting was “the most ambitious multilateral gathering of the Trump administration.”

“The rocks are where the rocks are, so when it comes to securing supply chains for both defense and commercial industries, we need trusted partners,” she said.

Japan’s minister of state for foreign affairs, Iwao Horii, said Tokyo was fully on board with the U.S. initiative and would work with as many countries as possible to ensure it is a success.

“Critical minerals and (their) stable supply is indispensable to the sustainable development of the global economy,” he said.

The stockpile strategy

The Export-Import Bank’s board this week approved the $10 billion loan — the largest in its history — to help finance the setup of the U.S. Strategic Critical Minerals Reserve. It is tasked with ensuring access to critical minerals and related products for manufacturers, including battery maker Clarios, energy equipment manufacturer GE Vernova, digital storage company Western Digital and aerospace giant Boeing, according to the policy bank.

The bank’s president and chairman, John Jovanovic, told CNBC that manufacturers, which benefit the most from the reserve, are making a long-term financial commitment, while the government loan spurs private investments.

David Abraham, a rare earths expert who has followed the industry for decades and is author of “The Elements of Power,” said the administration has focused on reinvigorating critical minerals production, but that it also is important to encourage development of manufacturing that will use those minerals He noted that Trump’s decisions to cut incentives for electric vehicles and wind turbines have undercut demand for these elements in America.

Efforts get some bipartisan support

A bipartisan group of lawmakers last month proposed creating an agency with $2.5 billion to spur production of rare earths and the other critical minerals. The lawmakers applauded the steps by the administration to work with allies to solve the problem.

“It is unacceptable for America’s economic well-being and national security to be at the whim of China due to their overwhelming control of critical minerals supply chains,” Sens. Jeanne Shaheen, D-N.H., and John Curtis, R-Utah said in a statement.

(AP)