Over the last five years, competition over critical minerals has become a focal point of great-power rivalry — particularly between the United States and China. These strategic materials, including rare earth elements, are vital for producing the advanced technologies underpinning the green economy, defence industries, artificial intelligence, and quantum computing. Given that the world is rapidly transitioning to cleaner energy, battery-powered vehicles, and cutting-edge electronics, the demand for critical minerals is surging. In parallel, their complex supply chains have intensified geopolitical tensions, with countries racing to secure stable critical minerals sources and reduce vulnerabilities.
China’s dominance in the mining, refining, and processing of most of these minerals — coupled with its recent willingness to weaponize them in trade wars — has prompted wide-ranging responses from the U.S. and its partners. Canada, with its abundant mineral resources and deeply integrated supply chains with the U.S., could play a potentially pivotal role in mitigating Chinese dominance.
This Dispatch explores how U.S.-China competition in critical minerals has evolved, how the U.S. (first under Joe Biden, and now Donald Trump) has responded, and what this means for Canada’s approach to securing its own critical minerals supply chains and preserving a strategic advantage.
China’s Dominance and ‘Weaponization’ of Critical Minerals
In a sector inherently prone to concentration — given the specialized nature of mining and refining — China has emerged as the dominant supplier. Its control is significant: the country accounts for approximately 60 per cent of global rare-earth production and roughly 85 per cent of mine-to-metal processing capacity. For key battery materials essential in green technologies, China refines 73 per cent of the world’s cobalt, 59 per cent of lithium, and 68 per cent of nickel. It also leads gallium and germanium production — two minerals critical for chipmaking.
More concerning to U.S. policymakers (and global markets) is Beijing’s clear willingness to wield these supply chain advantages as leverage in trade disputes. In recent years, China has repeatedly imposed export restrictions or temporary customs holds on minerals critical to semiconductors, electric vehicle batteries, and high-tech alloys. Among the most notable:
- July 2023: Imposition of customs restrictions on gallium and germanium, both crucial for chip production.
- October 2023: Temporarily halting exports of high-purity and natural flake graphite used for EV battery manufacturing.
- August 2024: Adding antimony, a critical dual-use material, to export controls.
- December 2024: Suspending exports of gallium, germanium, and antimony to the U.S. specifically.
- January 2025: Restricting tungsten, tellurium, bismuth, molybdenum, and indium — key materials for defence and cleantech — largely in retaliation to new U.S. tariffs.
The economic impact of these moves, so far, has been limited. For instance, although China’s germanium exports to the U.S. initially plunged in October 2023 — two months after the controls took effect — they soon rebounded to pre-control levels. One explanation is that Beijing’s measures fall short of a full embargo and still allow for exports under a stringent but workable licensing process. In addition, shipments to the U.S. of certain variants such as germanium oxides and zirconium dioxides, which are unaffected by the controls, surged in 2024. These targeted Chinese restrictions serve primarily as a symbolic reminder that China is willing and able to retaliate if Washington curbs its access to advanced technologies. However, should Beijing expand its list of controlled metals — especially to those with broader economic uses — its actions could have a far-reaching effect on the global critical minerals supply chain, in which Canada remains a vital participant.
U.S. Vulnerability and the Biden Administration’s Response
The U.S. relies heavily on imports for critical minerals. Of the 50 mineral commodities that Washington designates as “critical,” China dominates extraction and/or processing for around 30. In fact, China has been the U.S.’s largest supplier for 21 of these, and for many of those with no immediate substitute, the U.S. is 100 per cent import-reliant.
In response, the Biden administration focused on reducing dependence on China by accelerating domestic production, pursuing supply chain resilience, and forging alliances with like-minded democracies. These efforts included:
- Domestic Investment: Encouraging exploration, resource mapping, and more streamlined permitting for U.S.-based critical minerals mining and processing.
- Multilateral Frameworks: Leading the creation of the Minerals Security Partnership in June 2022, a coalition of 15 economies (including Canada, the EU, India, Japan, and South Korea) aimed at pooling resources and financing to secure stable critical mineral supplies.
- Bilateral Agreements: Strengthening collaboration with allies through specific memoranda of understanding, research and development projects, and targeted co-investment in “friendly” critical minerals sources.
The overarching strategy under Biden was ‘friendshoring’ or ‘ally-shoring,’: ensuring supply chain diversification away from single points of failure (China) while also supporting allied economies. Canada was a key beneficiary of this strategy and active participant in the Biden-era critical minerals frameworks.
Canada’s Approach: Critical Minerals Strategy and U.S. Collaboration
For Canada, critical minerals represent both an economic opportunity and a national security concern, given its integrated automotive, energy, and defence supply chains with the U.S. In 2022, Ottawa launched its Critical Minerals Strategy, which outlines how Canada aims to leverage its rich mineral deposits to serve as a secure and sustainable supplier to allies — particularly the U.S. — while maximizing new job creation, Indigenous partnerships, and the transition to a green economy.
Since 2020, Canada and the U.S. have collaborated under a Joint Action Plan on Critical Minerals, which facilitated co-investment and supply chain security. By 2024, Canada had secured multiple U.S. Department of Defense (DoD) investments in Canadian mining and refining initiatives through the Defense Production Act. These include:
- A combined US$14.7 million to Ontario-based Fortune Minerals Limited and Quebec-based Lomiko Metals Inc. to strengthen North American cobalt and graphite supply chains.
- US$20 million to Toronto-based Electra Battery Materials to create North America’s first cobalt sulphate refinery, expected to power EV batteries and DoD weapons systems by 2026.
- US$15.8 million for upgrading transmission lines in eastern Yukon to support critical minerals extraction.
These co-investments underscore the deepening of cross-border supply chain integration but also hinge on stable U.S. policies — unpredictability from Washington could undermine Canada’s role as a dependable partner.
Ottawa has, in recent years, deepened its alignment with U.S. economic security priorities by fine-tuning its regulatory framework to mitigate strategic vulnerabilities in the critical minerals sector. Alongside the broader Collaborative Action Plan with the U.S., Canada introduced amendments in 2022 to the Investment Canada Act (ICA), imposing additional scrutiny on foreign investments that could imperil national security. This move was designed to ensure that foreign state-owned companies and entities with ties to nations of concern — specifically China — do not infiltrate or disrupt North American supply chains.
The revamped rules have already led to targeted disinvestment decisions, underscoring Canada’s commitment to maintaining a secure and resilient critical minerals supply chain that aligns with U.S. de-risking strategies.
For example, SRG Mining cancelled a 19.4 per cent stake sale to China’s privately owned Carbon One New Energy Group in March 2024 after facing public criticism, including from industry minister François-Philippe Champagne, for allegedly "circumventing” the security review process. Similarly, Solaris Resources abandoned a planned 15 per cent stake sale to China's Zijin Mining Group for its copper project in Ecuador in May 2024, citing the uncertainty surrounding the ICA approval timeline. These specific cases, combined with earlier co-investments such as US$14.7 million allocated to enhance North American cobalt and graphite supply chains and US$20 million to establish the continent’s first cobalt sulphate refinery, reinforce the critical importance of a jointly co-ordinated framework for investment scrutiny and supply chain protection in safeguarding economic security amid intensified global competition. Even as Canada–U.S. trade faces new tensions, this co-ordinated approach remains vital.
Trump’s First 50 Days: A Shift Toward ‘America First’
When U.S. President Donald Trump returned to the White House in January, signals quickly emerged that the U.S. approach might pivot from ‘friendshoring’ to ‘America First.’
On his first day, Trump issued an executive order titled “Unleashing American Energy,” which called for streamlined permitting and federal support for domestic critical minerals projects, an assessment of national security risks tied to import reliance, and an emphasis on building capacity at home — even at the expense of allied supply chains.
The Trump administration’s approach to critical minerals appears far more unilateral and transactional than the Biden administration’s approach. For example, the executive order stressed prioritizing Americans’ interests, costs, and benefits, separating them from the global impacts when evaluating decisions on rules and regulations. Trump’s willingness to impose tariffs on strategic imports — including some from longstanding allies — further complicates the notion of a smooth cross-border critical minerals supply chain. Canada, in particular, risks seeing the revamped ‘America First’ posture disrupt well-established partnerships, especially if Washington deploys tariffs or restricts foreign co-investment in U.S. supply chains to pursue near-total onshoring.
Yet complete self-sufficiency in critical minerals is unrealistic for the U.S. Mining and processing certain rare earth elements or advanced battery materials from scratch requires huge investments, specialized labour, and environmental trade-offs. This gap suggests that even a ‘Trump 2.0’ administration might ultimately depend on Canada, Australia, or other allied suppliers — if only to fill the near-to-medium-term shortfall.
Canada is the U.S.’s largest supplier of minerals and metal imports, with sales totalling US$47 billion in 2023, and is the primary source of key minerals such as nickel and cobalt. Canada also plays an irreplaceable part in the U.S.’s efforts to power its manufacturing and defence capabilities. With a highly integrated critical minerals market, Canada and the U.S. trade intermediate and downstream critical minerals products across the border multiple times at different stages of processing.
In the case of nickel, the U.S. relies entirely on Canada for the refining capacity it lacks. In addition to having more readily available energy for smelting and a more efficient mine permitting process (average permitting time is two years in Canada compared to seven to 10 years in the U.S.), Canada also has more mining expertise in utilizing digital solutions for exploration and resource modelling, making it an essential partner to the U.S. The urgent need to outcompete China’s critical minerals dominance calls for preserving the North American critical minerals base, through agreements such as CUSMA, to enable intergovernmental co-operation on standards, co-investments, and knowledge-sharing.
Conclusion
In this era of accelerated U.S.–China competition, critical minerals stand at the nexus of economic security, national defence, and technological progress. China’s dominance in mining and processing, combined with its demonstrated willingness to limit exports in political disputes, creates a profound challenge for Western economies. The U.S. under Biden sought to mitigate this risk through alliances and friendshoring; under Trump’s new administration, the pivot seems to be inward—an ‘America First’ approach that may bypass or at least complicate traditional partnerships.
For Canada, the path forward requires vigilance and strategic positioning. Its own Critical Minerals Strategy aims to leverage Canada’s resource wealth to become a global supplier of choice, particularly for the U.S.
But if the Trump administration imposes high tariffs or aggressively pursues onshoring, Canada could face headwinds. Nonetheless, the complexities of establishing domestic critical mineral capacity in the U.S. means that Canadian co-operation will remain valuable for Washington in bridging short- to mid-term supply gaps. By continuing to invest in critical minerals development, fostering partnerships with like-minded allies, and advocating for stable North American supply chains, Canada can safeguard its economic interests and remain a linchpin in the fight against Chinese dominance in critical minerals.
• Edited by Ted Fraser, Senior Editor, APF Canada
