Canada, China spotlight critical minerals as supply-chain battleground

Critical minerals and rare earth elements are increasingly central to geopolitical balancing, after crude oil long defined geopolitics and natural resource competition. Nickel, copper, lithium and rare-earth oxides underpin fighter jets, electric-vehicle motors and AI data centers, and Canada is no longer treating its strategic resources as an asset to freely share with the United States, threatening to halt exports amid its trade war with the world's largest economy. Reuters reported on Friday, citing three sources it did not identify, that some Chinese rare earth suppliers are declining to ship to the U.S. for fear of repercussions from Beijing.

The resources and REEs have become a flashpoint in a global scramble to protect supply chains from what Washington views as predatory trade practices. China controls 60% to over 90% of global critical mineral processing, depending on the mineral and stage of the supply chain. "Whoever controls the raw materials is going to control the future of strategic technologies across the board," Gracelin Baskaran, director, Critical Minerals Security Program, Center for Strategic and International Studies, said on Wednesday at a U.S. House Committee on Ways & Means hearing.

"Raw materials directly impact every part of our national economic and energy security." At the hearing on Wednesday, congressional witnesses urged Washington to deepen trade ties to weaken China’s control over key minerals. They said the meeting focused on ways to strengthen strategic partnerships to secure critical resources and supply chains.

Baskaran said the resources are central to "our ability to build grids for affordable energy for Americans, or the future of American economic competitiveness through things like semiconductors." He said critical minerals can take 25 years to develop a project, while China benefits from not facing electoral cycles every four years. He added that policy should be built on longer horizons so investors can develop projects with confidence.

Under the Trump administration, the United States plans to deploy hundreds of billions of dollars in capital, between debt and equity, into the mining sector, according to David Copley, senior director at the National Security Council (NSC), said President Donald Trump launched the $12 billion Project Vault on February 2 to stockpile essential minerals. Washington has also begun backing price floors, offtake guarantees and stockpiling efforts with companies such as MP Materials Corp. and Energy Fuels Inc. This week, USA Rare Earth Inc.

completed its long-pending $2.8 billion acquisition of Serra Verde Group, the Brazilian company that owns the Pela Ema mine in Goiás. The company said on Friday that the deal creates “a global rare earths leader and a partner of choice for the supply of advanced materials and products that underpin Western national security and technological innovation.” In late August, after trade talks between Washington and Ottawa collapsed, Trump said tariffs on Canadian autos, trucks and steel would rise to 50% starting January 2027.

Prime Minister Mark Carney said he would match the tariffs “dollar for dollar.” POLITICO reported on Saturday that Carney was losing interest and patience in working with the U.S. on strategic minerals. He said he would continue pursuing Carney said at his August 22 press conference that Washington had missed an opportunity to work with Canada on critical minerals, adding that Canada did not cause the situation. He spoke the morning after he called his negotiators back to Ottawa.

Ontario Premier Doug Ford then raised the stakes by threatening to cut off key mineral exports to the United States in response to the tariff dispute. Canada supplies roughly 43% of the nickel the U.S. imports, along with the vast majority of U.S. copper ore imports and nearly 60% of refined zinc imports.

Washington sees Canada’s stockpiles as a buffer against China’s grip on critical minerals. The International Energy Agency says China controls roughly 91% of global rare-earth refining and 94% of finished magnet production. Reuters reported that several Chinese rare-earth producers have quietly halted shipments to the U.S., fearing retaliation from Beijing after China placed a Western This is a reminder that Beijing is willing to use its mineral chokehold as a pressure tactic ahead of high-stakes diplomacy. The IEA estimates that a full rollout of China’s export controls could threaten roughly $6.5 trillion in downstream global production annually.

Baskaran said the main issue is not whether critical mineral supply chains are political. She said the playing field is not level, adding that China has used foreign policy to secure minerals abroad while pairing that with a domestic industrial strategy to process them at home. She said processing hubs around the world need support and that not everything can be built in one place. Any escalation in Canada’s tariff fight or China’s export controls could ripple through EV supply chains, defense manufacturing and the broader commodities market.

That pressure may add fresh volatility to US critical mineral stocks including MP Materials, Energy Fuels and USA Rare Earth.