Jane
Kelsey, University
of Auckland, Waipapa Taumata Rau
On
January 14, Donald Trump issued a proclamation
threatening yet more tariffs if “trading partners” fail
to sign agreements on critical minerals and their derivative
products within 180 days of his announcement.
There
is no list of target countries, but it would be surprising
if Aotearoa New Zealand is not one of
them.
Trump’s pronouncement follows an investigation
under section 232 of the Trade Expansion Act 1962 that
found the United States is too reliant on foreign sources of
critical minerals and derivative products, threatening its
national (and economic) security.
According to the
investigation, this dependence and unpredictable supply
chains create vulnerability that could be exploited by
“foreign actors”.
Ultimately, this is the
latest salvo in Trump’s economic war with China. Critical
minerals are essential to advanced weapons systems,
high-tech industries (including artificial intelligence and
data centres), nuclear energy and electric
vehicles.
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China dominates
the mining, processing and manufacturing supply
chain for rare earth elements and rare-earth magnets
used in wind turbines, medical devices, electric vehicles
and military technology. It sources much of the raw product
from investments
offshore.
The United States is totally or largely
dependent on imports of over 40 critical minerals. Those it
mines it lacks the capacity to process, exporting raw
materials for refining and importing the final
product.
Trump blames lack of investment in US
processing capacity on China buying up mining assets in
other countries, processing raw materials cheaply in China,
then manipulating prices by flooding the market with cheap
products, making US domestic production
uneconomic.
Tensions grew last year when China imposed
export controls on critical mineral technologies in the
tit-for-tat tariff war with the US.
What
Australia’s deal tells us
Trump has directed
Commerce Secretary Howard Lutnick and Trade Representative
Jamieson Greer to pursue or continue negotiations with other
countries to ensure an adequate supply of critical minerals,
and to mitigate supply-chain vulnerabilities.
We
should assume the template for these negotiations is the critical
minerals framework agreement Australia secretly
negotiated with the US over five months, and signed in
October last year.
The agreement contains numerous
commitments that were once anathema to free trade
advocates, including:
-
“price support
mechanisms”, with a minimum price on “priority
minerals” to come into effect in late
2026 -
developing a global framework to
support those price controls -
curbing
Chinese acquisitions of new mining assets through domestic
screening of investments and pressure on third
countries.
On the investment side, a
US$8.5 billion pipeline for targeted financing
and joint ownership of projects between Australia and
the US would see US$1 billion invested by each country
within six months, and Australia fast-tracking approvals.
Australia’s mineral industry hailed
the deal as “AUKUS in action”, with Australia also
committing to major new military
purchases.
There’s a logic behind the deal.
Australia is the world’s fourth-largest producer of rare
earth elements, and home to BHP, Rio Tinto and Lynas Rare
Earths, among other mining giants. It was the top investment
destination for rare earth exploration in 2024.
But
Australia now faces tricky questions about who it can and
can’t sell these products to.
An Australian
representative from a critical minerals mining operation has
been reported as saying their company was “mindful of
the context in which we’ve been funded” and there’s an
assumption they “won’t be making many sales to Chinese
customers”.
But Australia has free
trade and investment
agreements with China, its largest
trading partner. Most of China’s investments
in Australia are in mining and energy.
The text
of the US–Australia critical minerals agreement says it is
non-binding and unenforceable. But the US has many forms of
retaliation for non-compliance.
Trump’s
proclamation makes it clear that anything below what the US
demands, either in these new agreements or their
implementation, can face retaliation through trade
sanctions.
The US–Australia agreement also said
they would convene a ministerial mining, minerals and metals
investment meeting within 180 days, but it is unclear with
which countries.
Would NZ sign up to Trump’s
agenda?
What does this mean for Aotearoa New
Zealand? At this stage we don’t know if the government has
been approached, and any deal would be secret until it is
signed. But given the coalition government’s pro-mining
agenda, the background context is important.
As
part of a Critical
Minerals Dialogue under the US-led Indo-Pacific Economic
Framework, New Zealand conducted a mapping of mineral
reserves, resources and processing capacity in
2024.
The framework seemingly lapsed with the end
of the Biden administration, but the critical minerals
project lives on in another form.
In January 2025,
the Ministry of Business, Innovation and Employment
published a Minerals
Strategy, featuring a list
of 37 critical minerals, 21 of which could be exploited
here.
The strategy aims to double the value of
minerals exports to NZ$3 billion by 2035, strengthen global
minerals supply chains, and leverage relationships and
international partnerships.
In November 2025, the
government announced it had joined the international Minerals
Security Partnership as a means to advance those
goals.
At the same time, there is a current claim
before the Waitangi Tribunal’s climate
change inquiry challenging the government’s mining
agenda as a breach of the Crown’s Treaty
obligations.
To date we have heard nothing from the
government about any demands from the Trump administration,
and it is following a softly-softly
foreign policy approach to the US.
But if New
Zealand is a target of the latest Trump directive, there
needs to be a full discussion about the implications –
before, not after the fact.
Jane
Kelsey, Emeritus Professor of Law, University
of Auckland, Waipapa Taumata Rau
This article is republished from The Conversation
under a Creative Commons license. Read the original
article.
