The US has announced plans to create a new critical minerals trade club to curb China’s dominance of supplies.

The club includes partnerships with Japan, the EU and Mexico and others, marking a rare push to improve international cooperation by the Trump administration, the Financial Times reported on February 4.

Since taking office, Trump has been running a minerals diplomacy where he has linked peace deals and military threats to winning mineral concessions for critical minerals and rare earth metals (REMs) to diversify supplies and break China’s almost total monopoly on supplies of the raw materials that are crucial for technology.

Trump’s commitment to support Ukraine began with forcing through a minerals deal that was signed on April 30 and more recently Russian President Vladimir Putin has launched a $9.2bn Siberian REMs mining project to tempt Trump into doing business with Russia, analysts say. Following the Alaska summit on August 15, Putin proposed joint US-Russia exploration of Russia's rare earth metals deposits and the supply of aluminium to the US market. After China, Russia has the world’s largest deposits of these elements, much of which remains underdeveloped.

But for projects with Russia to work, a ceasefire in Ukraine needs to be agreed. In the meantime, the US is working on building a much broader coalition to exploit minerals elsewhere and ensure key allies have supplies secured.

US Vice-President JD Vance said the trade club initiative was designed to counter Chinese market dominance by erecting tariff-based price floors and encouraging investment across the supply chains for rare earths, lithium and other strategic metals.

“We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers,” Vance said at a State Department meeting attended by ministers from 55 countries.

“We know that as soon as they’ve undercut our domestic makers … they leave the market … then jack up the price to a completely unfair level,” he added, in a pointed reference to China’s pricing tactics.

The potential for turning critical mineral supplies into a trade weapon was underscored last year when Beijing throttled exports on key metals during a tariff dispute with the White House.

In a joint statement issued by the US, EU and Japan, the countries pledged to “explore a plurilateral trade initiative with like-minded partners on trade in critical minerals”. The initiative, according to the text, “could include co-ordinated trade policy mechanisms, such as border-adjusted price floors, price gap subsidies or agreements to buy each others’ minerals at agreed prices”.

Washington finalised a bilateral minerals agreement with Mexico and is working toward a trilateral deal with Japan and the EU. The US-Mexico “critical minerals action plan” includes preferential trade terms and financing commitments for joint mining and processing projects.

Trump last month instructed US trade officials to prioritise deals that would counter what he termed the “threat” of Chinese control over critical mineral supply chains. Earlier this week, the administration announced plans for a $12bn stockpile of strategic minerals to be used by US manufacturers during periods of global disruption.

In a separate development, the US Department of Defence signed a $125mn agreement to purchase 400 tonnes of indium over three years from AIM Products LLC and Indium Corporation for the national defence stockpile. Both firms operate facilities across North America and Asia.

EU diplomats have cautiously welcomed the initiative, viewing critical minerals as one of the few areas for renewed transatlantic cooperation. European officials have proposed additional measures, such as contracts for difference, to stabilise prices and support producers beyond the use of tariffs.

“China poses the single biggest strategic threat to Washington,” Vance said, reinforcing the administration’s view that industrial policy and trade coordination are essential to secure long-term supply resilience.