President Donald Trump has decided to pump the brakes on tariffs for rare earths, lithium, and other critical minerals, at least for now. Instead of going straight to import duties, he's telling his team to sit down with international trading partners and figure out a better solution.

The move comes after Commerce Secretary Howard Lutnick wrapped up a Section 232 national security investigation that painted a pretty grim picture: America is dangerously dependent on foreign sources for processing critical minerals and the products made from them.

Just How Bad Is It?

The numbers tell the story. According to the White House, the U.S. relies entirely on imports for 12 critical minerals. For another 29, we're at least 50% dependent on foreign supply. That leaves major industries exposed to supply chain disruptions and wild price swings.

"These circumstances are a significant national security vulnerability that could be exploited by foreign actors," the White House warned, highlighting how essential these materials are for defense systems, energy infrastructure, and cutting-edge technologies.

Rather than slapping on tariffs immediately, Trump instructed Lutnick and U.S. Trade Representative Jamieson Greer to open negotiations with trading partners. The discussions are expected to explore ideas like establishing price floors for critical minerals, a concept that's been gaining momentum among Western mining companies and government officials. G7 finance ministers and representatives from countries including Australia discussed the approach at meetings this week.

If diplomacy fails, though, Trump has kept his options open. According to Reuters, he might "consider setting minimum import prices for critical minerals or may take other measures."

The China Problem

Here's where things get complicated. Lutnick's report emphasized that simply mining minerals domestically doesn't solve the security problem if America still depends on foreign countries to refine and process them. The U.S. is actually the world's second-largest producer of mined rare earth oxides, but we lack the processing capacity to handle it ourselves. Much of that raw material gets shipped overseas for refining, then imported back as finished product.

And when we talk about foreign processing, we're mostly talking about China. Beijing is a top global producer of more than half of the 54 minerals the U.S. Geological Survey considers critical, and it absolutely dominates refining capacity. Over the past year, China has restricted exports of several key materials as trade tensions with Washington have escalated, underscoring exactly how concentrated these supply chains have become.

"Mining a mineral domestically does not safeguard the national security of the United States if the United States remains dependent on a foreign country for the processing of that mineral," Trump said in his order.

Making matters worse, Lutnick's report highlighted a troubling trend: U.S. refining, manufacturing, and production of critical minerals have declined even as domestic demand keeps climbing. That demand is being driven by expanding defense requirements, the explosive growth of data centers, nuclear energy projects, and emerging energy technologies.

Trump has given Lutnick and Greer 180 days to report back on negotiation progress. In the meantime, the administration will continue monitoring imports and reserves the right to impose tariffs or other measures if talks don't produce results.