Trump’s $8.5 Billion Rare Earths Deal with Australia Aims to Challenge China’s Global Dominance
As China tightens its grip on the global supply of rare earth elements, U.S. President Donald Trump is striking bold new deals to loosen Beijing’s control over the minerals that power modern technology. However, his promise that America will soon have “an abundance” of these critical materials may be more hopeful than realistic.
“In about a year from now, we’ll have so much critical mineral and rare earths, and you won’t know what to do with them,” Trump declared on Monday. The statement followed his announcement of a $8.5 billion agreement with Australia designed to develop rare earth projects and strengthen U.S. access to these vital resources.
China’s Rare Earth Monopoly and Its Global Impact
China currently dominates more than 90% of the world’s refined rare earth output, giving Beijing significant leverage over global technology manufacturing. These 17 minerals are essential for producing smartphones, electric vehicles, wind turbines, and military equipment.
In recent years, Beijing has weaponized this dominance in its ongoing trade tensions with Washington. Earlier this year, China imposed unprecedented export restrictions on rare earth materials, leading to supply shortages and market disruptions around the world.
More recently, China’s decision to tighten control over trace amounts of China-processed rare earths abroad triggered new concerns in global manufacturing. The move prompted Trump to threaten 100% tariffs on Chinese imports, escalating trade tensions between the world’s two largest economies.
The $8.5 Billion U.S.-Australia Agreement
Under the new agreement, the U.S. and Australian governments plan to invest over $3 billion in critical minerals projects within the next six months, with an expected return of $53 billion in economic value, according to the White House.
The deal also includes several strategic initiatives:
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The U.S. Department of Defense will invest in building a 100-metric-ton-per-year advanced gallium refinery in Western Australia.
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The Export-Import Bank of the United States has issued over $2.2 billion in financing commitments for various critical mineral projects.
While these projects mark a major step toward reducing dependence on China, it remains unclear when production will begin.
Australia’s Balancing Act Between China and the U.S.
For Australia, the deal presents a diplomatic tightrope. Canberra relies heavily on China as its largest trading partner, yet it has increasingly aligned itself with Washington on defense and strategic matters.
This new partnership could strain Australia’s delicate relationship with Beijing, particularly as China continues to assert influence in the Indo-Pacific region. Nonetheless, Australia’s vast natural resources and advanced mining capabilities make it a critical ally for the U.S. in diversifying the global rare earths supply chain.
Why Rare Earths Are So Critical
Although rare earths are more abundant in nature than gold, they are difficult and costly to extract and refine. The environmental damage associated with their processing has discouraged many nations from developing large-scale operations, allowing China to dominate the industry for decades.
Between 2020 and 2023, the United States imported 70% of its rare earth compounds and metals from China, according to data from the U.S. Geological Survey.
A recent analysis by Goldman Sachs estimates that disruptions to just 10% of rare earth production could erase $150 billion in U.S. economic output. This highlights how crucial these materials are to the nation’s manufacturing and defense sectors.
America’s Push to Diversify Supply Chains
In response to China’s dominance, Washington has been aggressively seeking alternative supply sources from its allies. Australia, which holds the world’s fourth-largest rare earth deposits, has rapidly expanded its production capabilities in recent years.
The country also produces nearly half of the world’s lithium, a vital component in electric vehicle batteries. As the U.S. transitions toward renewable energy and electric mobility, securing a steady supply of these materials is becoming increasingly important for economic and national security.
Beyond Australia, the U.S. is also partnering with other resource-rich nations, including Pakistan, which recently signed memorandums of understanding (MoUs) to provide America with rare earths and other key minerals.
Experts Weigh In on the Deal’s Promise and Challenges
Kevin Hassett, director of the White House National Economic Council, emphasized that collaboration with Australia will make the global economy “less risky and less vulnerable to China’s rare earth extortion.”
According to a study by the Center for Strategic and International Studies (CSIS), Australia attracted $64 million in rare earths exploration funding last year, accounting for 45% of total global investment in the sector.
The report also noted that Lynas Rare Earths, an Australian company, became the first firm outside China to produce commercial quantities of dysprosium oxide—a critical heavy rare earth element used in electric vehicles and defense applications.
However, despite these promising developments, significant hurdles remain. Professor George Mavrogenes, a geologist at Monash University, warned that building a fully independent rare earth supply chain could take up to a decade.
“There’s a long way to go,” Mavrogenes said. “Even if the U.S. and Australia get serious, it would take years of consistent investment, skilled workforce development, and strong environmental management to establish full-scale production.”
He added that while Australia has enormous potential, challenges such as high energy costs, a shortage of skilled labor, and environmental regulations could slow progress.
Australia’s Growing Expertise and U.S. Support
Professor Rick Valenta, director of the University of Queensland’s Sustainable Minerals Institute, told ABC Radio that Australia has strong expertise in mining and refining technologies. However, he acknowledged that the nation has struggled to develop expertise in downstream processing—the crucial step that adds value to raw materials before export.
Valenta said that the new U.S.-Australia investment could be the catalyst the sector needs.
“There’s a refinery being built in Western Australia right now that’s targeting production of rare earths in 2027,” he explained. “We have several projects ready to launch but waiting for the final round of financing. This deal could finally push them into production.”
Breaking China’s Grip Will Take Time
While Trump’s optimism about America’s imminent rare earth boom may be ambitious, experts agree that his strategic partnerships are an essential step toward breaking China’s stranglehold.
Yet, even with billions in investment, a fully independent U.S. supply chain for rare earths remains years away. The journey will require sustained political will, international cooperation, and massive infrastructure investment.
For now, China’s dominance remains intact—but Washington’s determination to challenge it is stronger than ever.