In a move that reflects bipartisan concern, a group of lawmakers has unveiled a plan to establish a new agency backed by $2.5 billion, aimed at boosting the production of rare earth elements and other essential minerals. This initiative comes as the Trump administration has already been vigorously working to diminish China’s stronghold over the market for these crucial materials, which are vital for a range of high-tech products such as smartphones, electric vehicles, jet fighters, and missiles.

While it’s uncertain how this proposed legislation might fit into the existing White House strategy if it comes into effect, the urgency for the U.S. to significantly cut its dependency on China is clear. This urgency has been amplified by Beijing’s strategic use of its mineral market dominance during trade tensions with Washington. Following discussions, President Donald Trump and Chinese President Xi Jinping agreed in October to a one-year pause, in which China would continue its mineral exports in return for the U.S. easing some technology export restrictions.

In response to the vulnerabilities highlighted by the trade dispute, the Pentagon has allocated nearly $5 billion over the past year to secure access to these materials. With China processing over 90% of the world’s critical minerals, the U.S. is pursuing measures that involve taking equity stakes in several mineral companies and offering price guarantees—strategies that resemble those typically associated with Chinese economic policy rather than a Republican-led administration.

The legislation introduced by Senator Jeanne Shaheen, a Democrat from New Hampshire, and Senator Todd Young, a Republican from Indiana, proposes a more market-oriented solution. It suggests establishing an independent entity tasked with building a reserve of critical minerals and associated products, stabilizing their prices, and promoting production within the U.S. and allied nations. This aims to secure a steady supply chain not just for military needs but for the broader economy and manufacturing sectors as well.

Senator Shaheen described the bill as “a historic investment” designed to enhance the resilience of the U.S. economy against China’s market dominance, which she argues has exposed the nation to potential economic manipulation. Senator Young emphasized that forming this new reserve represents “a much-needed, aggressive step to protect our national and economic security.”

New sense of urgency

When Trump imposed widespread tariffs last spring, Beijing fought back not only with tit-for-tat tariffs but severe restrictions on the export of critical minerals, forcing Washington to back down and eventually agree to the truce when the leaders met in South Korea.

On Monday, in his speech at SpaceX, Defense Secretary Pete Hegseth revealed that the Pentagon has in the past five months alone “deployed over $4.5 billion in capital commitments” to close six critical minerals deals that will “help free the United States from market manipulation.”

One of the deals involves a $150 million of preferred equity by the Pentagon in Atlantic Alumina Co. to save the country’s last alumina refinery and build its first large-scale gallium production facility in Louisiana.

Last year, the Pentagon announced it would buy $400 million of preferred stock in MP Materials, which owns the country’s only operational rare earths mine at Mountain Pass, California, and entered into a $1.4-billion joint partnership with ReElement Technologies Corp. to build up a domestic supply chain for rare earth magnets.

The drastic move by the U.S. government to take equity stakes has prompted some analysts to observe that Washington is pivoting to some form of state capitalism to compete with Beijing.

“Despite the dangers of political interference, the strategic logic is compelling,” wrote Elly Rostoum, a senior fellow at the Washington-based research institute Center for European Policy Analysis. She suggested that the new model could be “a prudent way for the U.S. to ensure strategic autonomy and industrial sovereignty.”

But companies across the industry are welcoming the intervention from Trump’s administration.

“He is playing three-dimensional chess on critical minerals like no previous president has done. It’s about time too, given the military and strategic vulnerability we face by having to import so many of these fundamental building blocks of technology and national defense,” NioCorp’s Chief Communications Officer Jim Sims said. That company is trying to finish raising the money it needs to build a mine in southeast Nebraska.

Relying on allies for help

In addition to trying to boost domestic production, the Trump administration has sought to secure some of these crucial elements through allies. In October, Trump signed an $8.5 billion agreement with Australia to invest in mining there, and the president is now aggressively trying to take over Greenland in the hope of being able to one day extract rare earths from there.

On Monday, finance ministers from the G7 nations huddled in Washington over their vulnerability in the critical mineral supply chains.

U.S. Treasury Secretary Scott Bessent, who has led several rounds of trade negotiations with Beijing, urged attendees to increase their supply chain resiliency and thanked them for their willingness to work together “toward decisive action and lasting solutions,” according to a Treasury statement.

The bill introduced on Thursday by Shaheen and Young would encourage production with both domestic and allied producers.

Past efforts to bolster rare earths production

Congress in the past several years has pushed for legislation to protect the U.S. military and civilian industry from Beijing’s chokehold. The issue became a pressing concern every time China turned to its proven tactics of either restricting the supply or turned to dumping extra critical minerals on the market to depress prices and drive any potential competitors out of business.

The Biden administration sought to increase demand for critical minerals domestically by pushing for more electric vehicle and windmill production. But the Trump administration largely eliminated the incentives for those products and instead chose to focus on increasing critical minerals production directly.

Most of those past efforts were on a much more limited scale than what the government has done in the past year, and they were largely abandoned after China relented and eased access to critical minerals.

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Funk reported from Omaha, Nebraska. AP writer Konstantin Toropin contributed to the report.