Australia’s vast reserves of rare earth elements and critical minerals give the country a potential bargaining chip as it attempts to secure an exemption from U.S. President Donald Trump’s latest tariffs on steel and aluminum.
Why It Matters
As well as being of increasing importance and value to the global economy, rare earth elements and critical minerals have attracted increased attention since Trump’s inauguration. Strengthening America’s supply while decreasing dependence on China has emerged as a key aspect of his foreign policy, cited by some as the reason behind his interest in acquiring Greenland, while also playing a central role in negotiations over future American assistance to Ukraine.
Although Australia has ruled out imposing reciprocal tariffs, its leaders are working to secure an exemption from Trump’s tariffs on steel and aluminum imports. The country’s abundance of minerals and rare earth elements has emerged as a potential bargaining chip, particularly as the U.S. seeks to lessen its reliance on “adversarial states.”
What To Know
As seen in the map above, using data from the U.S. Geological Survey, Australia benefits from a substantial mineral endowment.
Australia is home to numerous deposits of rare earths like xenotime and monazite and minable reserves of precious stones, metals and minerals.
Its well-developed mining infrastructure has also allowed the country to emerge as one of the world’s leading producers of rare earths—as well as the top producer of iron ore, bauxite, and lithium, the latter listed as one of the 50 minerals considered “critical” by the U.S. government.
While not one of the leading suppliers of rare earths to the U.S., Australia has hoped that its strong minerals production capacity and burgeoning rare earths industry could grant it leverage as it seeks an exemption to the tariffs on steel and aluminum announced by Trump last month.
Last week, Resources Minister Madeleine King told Australian broadcaster ABC that the country’s minerals and rare earths are “in high demand,” adding that while a partnership with the U.S. to exploit these was attractive, “that’s up to them and we’ll continue to work with other nations as well.”
The U.S. remains heavily reliant on China for its rare earths, a situation experts previously told Newsweek presented a unique vulnerability for Washington. King said that the Australian market offers the possibility of a more stable minerals trading relationship.
Australia offered the U.S. increased access to its critical minerals in return for a metal tariff exemption. However, the Trump administration rejected this, The Australian Financial Review first reported, citing sources familiar with the negotiations.
When asked recently what role minerals could play in potential trade negotiations with the Trump administration, ambassador to the U.S. Kevin Rudd said that Australia could assist the country given its “national strategic vulnerabilities,” referring to America’s reliance on China and imports of critical minerals more generally.
What People Are Saying
Australian Prime Minister Anthony Albanese called Trump’s decision to impose tariffs on steel and aluminum imports “against the spirit of our two nations enduring friendship, and fundamentally at odds with the benefits our economic partnership has delivered over more than seventy years.”
Albanese said that Australia would not resort to reciprocal tariffs, calling these a “form of economic self-harm,” and adding that this would “only push up prices for Australian consumers.”
Australian ambassador to the U.S. Kevin Rudd told ABC on Thursday: “Prime Minister Albanese with President Biden a couple of years ago agreed on a critical minerals compact with that administration to up Australia’s level of supply we can do the same with this administration.”
Rudd continued: “America designates itself as having 50 categories of critical minerals which it needs for the future—50 priority categories. They see themselves as being vulnerable in 12 of those, and they are import dependent in 40 of those. For Australia, if you look at those 50, we are currently supplying 28 and can supply 36 of them. You see Australia equals the periodic table. We also have the biggest and best mining companies in the world. So we stand ready to assist as we did with the Biden administration.”
President Donald Trump told reporters on Air Force One that he had “no intention” of permitting country-specific exemptions to the steel and aluminum tariffs.
Bran Black, chief executive of the Business Council of Australia, in a statement: “It’s important to remember that it took eight months for the Australian Government to secure tariff exemptions under the last Trump administration — what this tells us is that these discussions are complex and that patience and persistence are key.”
What Happens Next
Despite Trump rebuffing its original minerals offer, Australia is still hoping to secure an exemption to the metals tariffs. Albanese stated that discussions with the Trump administration were “ongoing.”
Resources Minister King told Guardian Australia that the country will continue to advocate for an exemption but would not propose a more favorable offer on critical minerals to the U.S.
