Vice President J.D. Vance on Wednesday outlined a U.S. push to form a trading bloc of allied governments and companies to secure supply of critical minerals and blunt China’s market leverage. Speaking at a State Department meeting of foreign ministers hosted by Secretary of State Marco Rubio, Vance framed the plan as a response to disruptions during the past year that exposed heavy dependence on Chinese-controlled rare earths. The proposal would combine tariffs, coordinated stockpiling and public-private finance to maintain price floors and discourage market flooding by a dominant supplier. Administration officials say the approach complements Project Vault, a separate stockpile initiative backed by a $10 billion Export-Import Bank loan and private capital.
Key Takeaways
- The administration proposes a critical-minerals trading bloc of allies to guarantee access and raise production across the alliance; discussions were presented at a State Department meeting on Feb. 4, 2026.
- China currently controls about 70% of rare earths mining and 90% of processing, figures cited by U.S. officials as central to the policy rationale.
- Project Vault: the U.S. Export-Import Bank approved a $10 billion loan to seed a U.S. Strategic Critical Minerals Reserve, paired with roughly $1.67 billion in private capital pledged by industry partners.
- The administration has also made direct investments, including $1.6 billion into USA Rare Earth, and the Pentagon committed nearly $5 billion over the past year to secure military supply chains.
- Lawmakers proposed a complementary $2.5 billion agency to accelerate domestic production, reflecting some bipartisan support for supply diversification.
- Policy tools under consideration include common tariffs to sustain price floors and coordinated stockpiles to prevent destabilizing market floods by any actor.
- Industry leaders say financing scrutiny has intensified: government and private backers demand delivery plans and investor-style returns tied to loans and equity stakes.
Background
Critical minerals — a category that includes rare earth elements essential to jet engines, batteries, electric motors and smartphones — have long been concentrated in a small number of suppliers. China’s integrated position in mining and processing has allowed it to exert outsized influence on global prices and availability. Over the past year, tariff and trade tensions exacerbated that vulnerability, prompting U.S. officials to seek ways to insulate manufacturers and defense contractors from supply shocks.
U.S. policymakers have several policy levers at hand: direct public investment, stockpiling, export-import financing and trade measures coordinated with partners. Project Vault and the Export-Import Bank loan represent a public-private financing model intended to attract industry commitments from battery makers, aerospace firms and other large consumers. Meanwhile, congressional proposals for a new rare-earths agency signal appetite on Capitol Hill for a long-term industrial strategy.
Main Event
At the State Department meeting, Vance urged allies to form a bloc that would guarantee American access to critical minerals while fostering production across member states. He described the plan as an opportunity for self-reliance among partners rather than dependence on single external suppliers. Officials said the bloc would use coordinated tariffs and stockpiling to maintain price floors and deter a dominant supplier from flooding markets to undercut rivals.
The announcement followed President Donald Trump’s recent unveiling of Project Vault, a stockpile strategy backed by a $10 billion Ex-Im Bank loan and nearly $1.67 billion in private capital. Administration spokespeople say Project Vault will target materials used by firms such as Clarios, GE Vernova, Western Digital and Boeing, and will operate as a public-private partnership designed to bind beneficiaries into long-term commitments.
U.S. investments have also included direct equity and loan deals in domestic producers; the government extended $1.6 billion to USA Rare Earth for equity and repayment terms. Pentagon spending of nearly $5 billion over the last year was described by defense officials as a parallel effort to secure military supply chains and reduce strategic vulnerability.
Officials acknowledge the bloc is an early-stage concept: details on membership rules, tariff levels and enforcement mechanisms remain subject to negotiation. Administration representatives framed the effort as scalable — beginning with willing allies and expanding to partners across Europe, Asia and Africa that attended the meeting.
Analysis & Implications
The proposal signals a shift from purely domestic remedies toward multilateral industrial coordination. By coupling stockpiles with tariff-backed price floors, the bloc aims to create commercial incentives for miners and processors outside China to invest and scale. If implemented, this could accelerate new mines and refineries in allied countries, but it will require sizable capital and workable procurement rules to succeed.
Tariff-based price floors carry trade-offs: they can stabilize margins for new producers but risk higher near-term costs for manufacturers that rely on competitively priced inputs. A bloc that harmonizes tariffs could blunt market manipulation, yet it will need transparent safeguards to avoid long-term protectionism that stifles competition and innovation.
Strategically, a successful allied supply network would reduce the leverage a single state exerts over high-tech supply chains and defense readiness. Economically, however, building upstream mining and downstream manufacturing capacity will likely take years and sustained policy support. The plan’s effectiveness depends on allied willingness to commit capital, accept short-term price adjustments and align procurement policies.
Comparison & Data
| Measure | Value | Context / Source |
|---|---|---|
| China share of rare earth mining | ~70% | Market estimates cited by U.S. officials |
| China share of processing | ~90% | Market estimates cited by U.S. officials |
| Ex-Im Bank loan for Project Vault | $10 billion | Board approval for strategic reserve financing |
| Private capital pledged | ~$1.67 billion | Industry commitments tied to Project Vault |
| Direct U.S. government investment in USA Rare Earth | $1.6 billion | Equity/repayment agreement announced by officials |
| Pentagon spending to secure materials (past year) | ~$5 billion | Defense procurement and resilience efforts |
| Congressional proposal for new agency | $2.5 billion | Legislative proposal to spur domestic production |
The table shows the scale gap between current Chinese market concentration and the initial U.S. financial commitments. Even with large loans and Pentagon funding, scaling alternative supply chains requires additional private-sector investment, permitting reforms and multi-year industrial planning. Policymakers must weigh the immediate strategic benefits of stockpiles against the longer-term need to rebuild integrated upstream and downstream capacity.
Reactions & Quotes
U.S. officials framed the move as defensive industrial policy to protect manufacturers and the defense sector from future supply shocks. Industry leaders largely welcomed clearer demand signals and financing, while some economists cautioned about higher short-term costs.
“What is before all of us is an opportunity at self-reliance,”
J.D. Vance, U.S. Vice President
Vance used this phrase to emphasize alliance-based resilience rather than unilateral decoupling. Officials said the bloc would prioritize partners willing to coordinate trade and stockpile rules.
“It creates a scenario where there are no free riders; everybody pitches in to solve this huge problem,”
John Jovanovic, Ex-Im Bank Chairman
Jovanovic described the Ex-Im loan as a public-private tool to lock in manufacturing commitments from beneficiary firms, making public capital a catalyst for private investment.
“We don’t want to ever go through what we went through a year ago,”
President Donald Trump
The president cited last year’s supply disruptions and trade measures as the immediate impetus for Project Vault and related actions to diversify sources of critical minerals.
Unconfirmed
- It is not yet confirmed which specific allied countries will join a formal trading bloc or the timeline for formalizing membership.
- The precise tariff levels and enforcement mechanisms to sustain price floors remain under discussion and have not been finalized.
- Long-term private-sector commitments tied to Project Vault are reported but subject to due diligence and contract terms that could change.
- The degree to which China might respond with countermeasures is unclear and was not specified by U.S. officials at the meeting.
Bottom Line
The U.S. proposal to build a critical-minerals trading bloc with allies is a strategic attempt to convert recent supply vulnerabilities into coordinated industrial policy. Short-term measures — the $10 billion Ex-Im loan, private capital commitments, and Pentagon spending — aim to create breathing room for domestic and allied production to expand. Success depends on multilateral buy-in, the ability to attract large-scale private investment, and careful calibration of trade measures to avoid counterproductive protectionism.
For businesses and policymakers, the immediate effect will likely be greater financing options and clearer demand signals; for global markets, the effort could gradually reduce single-supplier risks but will not instantly alter China’s dominant position in mining and processing. Observers should watch which partners join the bloc, the detail of tariff and procurement rules, and how quickly new processing capacity comes online.