Input Stories

Section 232 tariffs will not help the United States diversify its sources of critical minerals and reduce its reliance on China, the NAM told the Commerce Department last week. Instead, policymakers should pursue permitting reforms, enact strategic incentives to enhance domestic production and secure favorable trade and investment arrangements with American allies.

Energy dominance: The U.S. needs access to certain key minerals to maintain its energy and national security, the NAM argued.

• Critical minerals like lithium, cobalt and copper are essential to both U.S. energy production and national security, being used in everything from smartphones to autos to nuclear power plants. Yet all three are sourced heavily from abroad due to a lack of domestic production, meaning that tariffs would cause immediate shortages.
• Meanwhile, antimony, titanium and alloying elements are crucial to many defense products, from jets to naval vessels to artillery, as well as to commercial aircraft. The U.S. also overwhelmingly imports these metals and needs time to boost domestic sources.
• Germanium, a key component in fiber optics, semiconductors and other electronics, comes to the U.S. mainly from China, the NAM pointed out. China has imposed export controls on the mineral, which means the U.S. must diversify its sourcing, not enact tariffs.

The better path: U.S. policymakers do have options for increasing U.S. supplies of critical minerals, the NAM said.

• Most importantly, policymakers should speed up permitting timelines and streamline regulations to allow for the new construction of smelting and refining operations.
• Policymakers should also offer incentives, by drawing on the Defense Production Act and the Section 45X Advanced Manufacturing Production Tax Credit. In addition, the U.S. should move to establish a strategic reserve of critical minerals.
• On trade policy, the U.S. must enhance its trading relationships with reliable, allied partners to overcome Chinese dominance in this sector. This should include innovative “sectoral” deals that lock in preferential terms with countries that have complementary assets, production capabilities and expertise.

The last word: “The NAM’s recommendations … offer several alternative paths to achieving national security and economic resiliency and competitiveness in the critical minerals space, without raising costs for manufacturers in the U.S.,” said NAM Vice President of International Policy Andrea Durkin.

• “Manufacturers look forward to working with the administration to support a robust and competitive critical minerals industry in the U.S.—and to ensure that manufacturers of all sizes and in all segments of the industry have access to the materials necessary for modern, innovative manufactured products.”