Hindsight is 20/20, and the president now has a stopgap solution to last year’s minerals problem with China: a strategic reserve.
This probably could have been fixed sooner. In 2019, China fell not-so-subtle clues that it could retaliate against Trump 1.0-era trade restrictions by withholding minerals essential to modern manufacturing — things you’ve probably never heard of like dysprosium, terbium, indium, and yttrium. If you have an iPhone, maybe you have heard that it contains tungsten. You’ll never guess where the tungsten is comes from.
About five years later, in the spring of last year, shortly after Trump launched a second trade war with China, China made good on its threat and added these very rare earth metals to its export control list.
Since China’s huge mining sector gives it control of 69% of the production of these mineralsand since American manufacturers started stop operations Amid the restrictions, Trump couldn’t do much except offer concessions, so he lowered prices.
The White House press release on the deal called it “a massive victory that safeguards America’s economic strength and national security while putting American workers, farmers and families first.” But it was actually embarrassing for Trump and generally seen as a victory for China.
SO, according to BloombergTrump announced plans Monday to create a $12 billion stockpile of these minerals to prevent this from happening again.
“Project Vault,” as the company is called, currently appears to be a stockpile of cash: $2 billion provided by private capital, plus a $10 billion bank loan.
The aim of the project is to give manufacturers a lifeline in the event of a price shock event. Companies will commit to purchasing rare earth minerals before such a shock, at a specific price. In the meantime, Project Vault will actually have to find and store all of these minerals. Project Vault holds this inventory and manufacturers can draw material from their allocation if necessary, but this will come with the obligation to replenish the stock afterwards.
“We never want to relive what we went through a year ago,” Trump said. according to Bloomberg. This is verified.
