As the foundations of the U.S. economy and future growth is increasingly built around digital assets, the Trump administration wants to remind Americans that commodities they can see and touch are still very much in play. Past presidents have tried to steer markets away from speculative behavior by focusing on the fundamentals of the world’s most widely traded physical good: oil. But for Trump and his officials, there is another tangible commodity that has simply become too important to ignore.
“There is no realer thing than oil—and I would add to that there’s no realer thing than critical minerals,” Vice President JD Vance said on Wednesday.
Vance was addressing ministers from 55 countries, who this week gathered in Washington to discuss a critical minerals trading bloc. Such a partnership would be designed to undermine China’s stranglehold on the mining of key elements that make everything from smartphones to electric cars and fighter jets tick, the foundations of very real economic value that could rival the strategic importance of petroleum.
Trump has taken big steps towards increasing the U.S. presence in the global market for critical minerals, elements including cobalt and lithium as well as valuable rare earth metals. This month, in addition to a minerals-focused trading bloc with allies, the administration announced a $12 billion strategic stockpile of the raw materials, and over the past few months the government has bought stakes in multiple rare earths and minerals suppliers. It has all been part of a strategy to reduce America’s dependence on China, which holds a near-monopoly on critical minerals mining and processing and has not been afraid to flex that status during its trade war with the U.S.
“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 during his speech.
Making up lost ground
Vance characterized the importance and value of these materials as potentially superior to that of the sprawling digital economy that has eaten up a large chunk of investment in the U.S. in recent years. Artificial intelligence, cloud computing and the related data center infrastructure needed to power it are dominating private investment and GDP growth. Last year, the capital expenditure of five large U.S. technology companies totaled $399 billion, according to Deutsche Bank analysts, who also warned that investments in AI-related sectors had become “critical” to GDP growth, “with no guaranteed return.” In the first quarter of last year, AI accounted for 71% of venture capital deal value.
“As much as data centers and technology and all of these incredible things that we’re all working on matter, fundamentally you still have an economy that runs on real things,” Vance said.
With its minerals stockpile and expanded stakes in industry giants, the U.S. has started to direct more government funding towards the mining sector, but China remains ahead in this respect. Last year, China invested a record $32.6 billion in overseas metals and mining projects, as part of its growing Belt & Road portfolio in central Asia and Africa.
The U.S. seeks collaborative efforts
It isn’t the first time an administration has pushed markets to focus on tangible goods. In 2008, towards the beginning of his presidency, Barack Obama frequently berated oil speculators for artificially inflating prices. Obama tightened a loophole that exempted energy futures traders from some federal oversight and regulations, arguing that “excessive speculation” from investors had contributed to soaring gas prices for consumers. His prescription was more funding to monitor oil futures trading and higher penalties for those found to be manipulating oil markets.
Vance went back even further for a historical analogue to his critical minerals framing. He referenced the Washington Energy Conference, a 1974 summit that sought to establish shared energy policies in the wake of an oil embargo that had wreaked economic havoc on oil-consuming nations over the past year. The goal of the conference was to mitigate price hikes and supply shortages, a particular pain point as the embargo had been imposed by a small club of oil-producing nations in the Middle East and North Africa.
“That meeting took place during a moment where global energy supplies were concentrated, where markets were distorted, and access to a single critical resource—at that time, of course, being oil—had become a tool of political pressure,” Vance said.
Five decades later, the critical resource is rocks and minerals, and the concentration is almost entirely in the hands of a powerful economic adversary to the U.S. At the summit, Trump officials discussed greater collaboration with partners and allies to steel supply chains against potential shocks from China, floating a series of potential market mechanisms to do so, including price floors among participating nations.
“This entire effort will be stronger and far more competitive if we build it together,” Vance said.
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