Washington: The Trump administration is set to implement price floors across various industries to counteract what it perceives as market manipulation by China. Treasury Secretary Scott Bessent announced this measure during the CNBC Invest in America Forum held in Washington, DC.
According to Anadolu Agency, Bessent highlighted the challenges posed by China's market practices, particularly its dominance in the rare earths industry. Over the past two decades, China has effectively driven foreign competitors out of business by leveraging its control over refining and processing to reduce prices significantly. In response, the US government plans to establish price floors and engage in forward buying across multiple industries to prevent similar occurrences in the future.
Bessent further emphasized the necessity for the US to establish a strategic mineral reserve. He revealed that JP Morgan Chase has expressed interest in collaborating with the Trump administration to develop such a reserve. The importance of rare earth magnets is underscored by their use in critical US weaponry systems, including smart bombs, Tomahawk missiles, and the F-35 aircraft. Recent efforts by the US government aim to decrease reliance on China for rare earths and boost domestic production.
In a significant move last July, MP Materials, the largest US rare earth miner, entered into an agreement with the Department of Defense. The agreement includes an offtake agreement, a price floor, and an ownership investment. Bessent suggested that similar deals could be struck with other companies in light of China's recent restrictions on rare earth exports.
The Trump administration, while aiming for self-sufficiency in strategic sectors, intends to avoid overextending its reach into non-strategic sectors. Bessent expressed caution about potential overreach, stating the importance of maintaining focus on critical areas. Amidst these developments, China's expansion of rare earth export restrictions last Thursday prompted President Trump to threaten imposing 100% tariffs on China.