Finance
US proposes critical minerals trade bloc aimed at countering China
Published by Global Banking and Finance Review
Posted on February 4, 2026
2 min readLast updated: February 4, 2026
Quick Summary
The US proposes a trade bloc for critical minerals to counter China's dominance, backed by Project Vault with $12 billion in funding.
US Vice President Proposes Trade Bloc for Critical Minerals to Counter China
US Trade Bloc Initiative for Critical Minerals
By Michael Martina and Simon Lewis
Background on Project Vault
WASHINGTON, Feb 4 (Reuters) - U.S. Vice President JD Vance on Wednesday unveiled plans to marshal allies into a preferential trade bloc for critical minerals, proposing coordinated price floors as Washington escalates efforts to loosen China’s grip on materials crucial to advanced manufacturing.
Impact on Mineral Companies
The Washington meeting comes after President Donald Trump on Monday launched a strategic stockpile of critical minerals, called Project Vault, backed by $10 billion in seed funding from the U.S. Export-Import Bank and $2 billion in private funding.
Strategic Goals of the Initiative
China has wielded its chokehold on the processing of many minerals as geo-economic leverage, at times curbing exports, suppressing prices and undercutting other countries' ability to diversify sources of the materials used to make semiconductors, electric vehicles and advanced weapons.
"We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers," Vance told the gathering of visiting ministers in Washington without mentioning China.
"We will establish reference prices for critical minerals at each stage of production, pricing that reflects real-world fair market value, and for members of the preferential zone, these reference prices will operate as a floor maintained through adjustable tariffs to uphold pricing integrity," Vance said.
Shares of minerals companies fell on the news. MP Materials lost 2.8%, Critical Metals dropped 7.7%, NioCorp Developments was down 2.8%, and USA Rare Earths lost 6.6% in morning trading in New York.
(Reporting by Michael Martina, Simon Lewis, David Brunnstrom, Jarrett Renshaw in Washington, Julia Payne in Brussels and Robbie Corey-Boulet in Dakar; Editing by Humeyra Pamuk, Deepa Babington and Mark Porter)
Key Takeaways
- •US proposes a trade bloc for critical minerals.
- •The initiative aims to counter China's market dominance.
- •Project Vault is backed by $12 billion in funding.
- •Reference prices will be set for fair market value.
- •Mineral company shares fell following the announcement.
Frequently Asked Questions about US proposes critical minerals trade bloc aimed at countering China
1What is a trade bloc?
A trade bloc is a group of countries that come together to promote trade and economic cooperation among themselves, often reducing or eliminating tariffs and other trade barriers.
2What are critical minerals?
Critical minerals are essential raw materials that are crucial for the production of high-tech products, including electronics, renewable energy technologies, and advanced manufacturing.
3What is Project Vault?
Project Vault is a U.S. initiative aimed at creating a strategic stockpile of critical minerals to reduce dependency on foreign sources, particularly from China.
4What is a preferential trade bloc?
A preferential trade bloc is a type of trade agreement where member countries provide each other with favorable trade terms, such as lower tariffs, to enhance economic cooperation.
5What are reference prices?
Reference prices are benchmark prices set for goods or services that serve as a standard for pricing in the market, helping to ensure fair market value.
