US Proposes Critical Minerals Trade Bloc to Counter China's Dominance

US Unveils Critical Minerals Trade Bloc Initiative

Washington, D.C. – On Wednesday, February 4, 2026, US Vice President JD Vance announced a significant initiative to form a preferential trade bloc for critical minerals with allied nations. The proposal, unveiled during a ministerial gathering in Washington attended by representatives from over 50 countries, seeks to diminish China's dominance in the critical minerals sector, which is vital for advanced manufacturing, electric vehicles, semiconductors, and defense systems.

'Forge' Initiative to Establish Price Floors and Tariffs

Vice President Vance outlined the core components of the new trade bloc, dubbed the 'Forum on Resource Geostrategic Engagement,' or 'Forge.' The plan involves establishing coordinated price floors for critical minerals at each stage of production, ensuring pricing that reflects 'real-world fair market value.' To uphold this pricing integrity and prevent market manipulation, the framework will include adjustable tariffs for members of the preferential zone. Vance stated, 'We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers.' This mechanism is designed to create stable investment conditions and diverse production centers, making supply chains resilient to external disruptions.

Addressing China's Extensive Control

The US initiative directly challenges China's long-standing grip on the global critical minerals trade. China currently controls approximately 60 percent of the world's rare earth minerals and processes an estimated 90 percent of the global supply. This extensive control has allowed Beijing to wield geo-economic leverage, at times curbing exports, suppressing prices, and undermining other countries' efforts to diversify their sources. China has previously imposed export controls on key materials such as gallium, germanium, and various rare earth elements, impacting industries reliant on these crucial inputs.

Allied Participation and Broader US Strategy

The ministerial meeting, hosted by Secretary of State Marco Rubio, saw participation from a broad array of nations, including India, South Korea, Australia, Japan, Germany, the European Union, Singapore, Malaysia, Thailand, the Democratic Republic of Congo, Canada, France, Italy, the United Kingdom, New Zealand, and Saudi Arabia. This gathering follows President Donald Trump's launch of 'Project Vault' on Monday, February 2, 2026, a strategic US stockpile of critical minerals. Project Vault is backed by $10 billion in seed funding from the US Export-Import Bank and an additional $2 billion in private funding, aiming to shield manufacturers from supply chain disruptions. The US has also engaged in bilateral agreements, such as the October 2025 deal with Australia, and is a member of the Minerals Security Partnership, further underscoring its commitment to securing critical mineral supply chains.