A significant bipartisan legislative effort is underway in the United States to break China's stranglehold on the global supply of critical minerals. Lawmakers have proposed creating a new federal agency backed by $2.5 billion to spur domestic production and stockpiling of rare earths and other materials vital for modern technology and defence.
A Bipartisan Push for Strategic Autonomy
The bill, introduced on Thursday 15 January 2026 by Senator Jeanne Shaheen, a Democrat from New Hampshire, and Senator Todd Young, a Republican from Indiana, aims to establish an independent body. This agency would be charged with building a national stockpile, stabilising prices, and encouraging production both at home and among allied nations. Shaheen labelled the legislation a "historic investment" to bolster economic resilience against coercion, while Young called it an "aggressive step" to protect national and economic security.
This legislative move comes amid a broader, urgent push by the US government to reduce dependency on Beijing. The trade war exposed a critical vulnerability: China processes over 90% of the world's critical minerals, which are essential for manufacturing everything from smartphones and electric vehicles to advanced jet fighters and missile systems. Last spring, Beijing demonstrated its leverage by restricting exports, forcing Washington to back down and agree to a temporary truce in October.
Unconventional Tactics: The Pentagon's Investment Spree
Parallel to the congressional proposal, the Trump administration has already taken aggressive, direct action. Defence Secretary Pete Hegseth revealed that in just the past five months, the Pentagon has deployed over $4.5 billion in capital commitments to secure six critical minerals deals. This represents a stark shift towards a form of state capitalism, with the US government taking equity stakes in private companies.
Notable investments include a $150 million stake in Atlantic Alumina Co. to save America's last alumina refinery and build a gallium production facility in Louisiana. Last year, the Pentagon also announced a $400 million purchase of preferred stock in MP Materials, which operates the sole US rare earths mine in Mountain Pass, California, and entered a $1.4 billion joint venture with ReElement Technologies Corp. to develop a domestic supply chain for rare earth magnets.
Securing Supply Through Allies and Acquisitions
The US strategy is not limited to its own borders. The administration is actively seeking to diversify supply chains through allies. In October, President Trump signed an $8.5 billion agreement with Australia to invest in mining projects there. Furthermore, the administration has shown keen interest in Greenland, seen as a potential future source for rare earth extraction.
The issue of supply chain vulnerability was also a key topic for G7 finance ministers, who met in Washington on Monday. US Treasury Secretary Scott Bessent urged allies to increase supply chain resiliency, highlighting the global dimension of the challenge.
While past efforts, including under the Biden administration, have focused on stimulating demand through green technology incentives, the current approach under Trump has pivoted sharply towards directly boosting production. Analysts note that the scale and nature of recent interventions mark a dramatic departure, driven by a new sense of strategic urgency to ensure "industrial sovereignty" in the face of Chinese dominance.
