US floats new critical minerals trading bloc: Can Trump break China’s rare earth monopoly?

Washington pitches allied minerals alliance as rare earth supply risks move to centre stage.

US Vice President JD Vance speaks during the Critical Minerals Ministerial at the State Department in Washington, D.C., the United States, on February 4, 2026. (Photo: Reuters)

Washington: The United States has unveiled plans for a proposed critical minerals trading bloc, making a coordinated push with allies to loosen China’s grip over the global rare earths industry and secure long-term access to materials important for modern economies.

Speaking at a gathering of foreign ministers at the US State Department on Wednesday (February 4), Vice President JD Vance said the past year of trade friction had laid bare how much the world depends on critical minerals controlled by China. The proposed bloc would bring together allied and partner nations to align supply, pricing and production strategies.

He said the United States wants allies and partner countries to come together in a trading bloc that would ensure American access to its industrial base while also expanding mineral production across participating countries.

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Vance described the initiative as a rare opportunity for countries facing similar vulnerabilities to act collectively. He said the situation presents an opportunity for self-reliance, where countries would only need to depend on each other for the critical minerals required to support their industries and sustain growth.

China presently accounts for about 70 percent of global rare earth mining. This gives Beijing control over materials used in everyday technologies such as smartphones and cars, as well as in defence systems and advanced manufacturing.

The United States ranks a distant second in rare earth mining at just 12 percent, leaving a large gap to close. As a result, President Trump spent much of 2025 meeting with leaders from Ukraine, Australia, Japan and countries across Central and Southeast Asia to negotiate trade deals aimed at securing access to rare earths and critical minerals. It was an effort to give the United States a better chance of competing with China.

Vance returned to that theme while opening the meeting hosted by Secretary of State Marco Rubio, saying, “I think a lot of us have learned the hard way over the last year how much our economies depend on these critical minerals.”

Delegations from South Korea, India, Thailand, Japan, Germany, Australia and the Democratic Republic of the Congo were among those attending the discussions in Washington, along with officials from dozens of other European, Asian and African nations.

The diplomatic push unfolded as tensions simmer between Washington and some of its traditional allies, particularly following President Donald Trump’s unsolicited statements about acquiring Greenland from Denmark. The issue has raised unease within NATO capitals.

Denmark has been on high alert, and several NATO countries sent troops to Greenland to strengthen and fortify the territory. This move is important because it has unsettled many traditional US allies and partners and caused discomfort with dealings involving the United States.

Despite that backdrop, the White House has pressed ahead with its minerals agenda. On Monday, officials announced plans to build a new government reserve of key materials under an initiative called Project Vault.

Vance’s remarks came after Trump held what he described as an “excellent” phone call with Chinese President Xi Jinping, although it is unclear whether the proposed bloc was discussed.

Along with the trading bloc, he said Washington is preparing to introduce a pricing floor for critical minerals. The move is aimed at encouraging private investment in mining and processing projects that have struggled to compete with lower-cost Chinese supply.

If implemented, the approach could influence global supply chains for materials essential to electric vehicles, semiconductors and defence systems. It could also increase costs for manufacturers in the near term and add fresh strain to already tense US-China trade relations.

China’s stricter rules on rare earth exports last year caused delays and temporary shutdowns at car factories in Europe and the United States. At the same time, a surge of low-priced lithium from China has slowed expansion plans for domestic producers in the United States.

Responding to questions about the Washington meeting, China’s embassy in the United States told the Reuters that “China has long played an important and constructive role in keeping the global industrial and supply chains of critical minerals safe and stable and is willing to continue to make active efforts in this regard”.

China’s influence was also evident in October, when Trump agreed to scale back tariffs on Chinese goods after Beijing pledged to pause tighter restrictions on rare earth exports.

Wednesday’s talks highlight a broader US effort to coordinate policy tools with partners to counter China’s dominance in critical minerals, even as Trump’s sweeping “America First” tariff agenda continues to unsettle allies.

As Washington pushes forward with its proposed bloc, the discussions highlight how minerals buried deep underground have become a central front in global trade, industrial security and geopolitical competition.