The discussion surrounding U.S. tariff policies on critical minerals from China has become a focal point as the nation nears its upcoming presidential election in November. Both major candidates, Vice President Kamala Harris and former President Donald Trump, are expected to continue utilizing tariffs as a key instrument in the ongoing trade disputes with China. However, their respective strategies diverge significantly, each mirroring distinct approaches towards energy transition, industrial policy, and U.S.-China relations.
Under the Biden administration, Section 301 tariffs were enforced on a variety of Chinese goods, including essential components crucial to the energy transition. These components, such as lithium-ion batteries and natural graphite, play a vital role in technologies like electric vehicles and renewable energy storage. The tariffs, escalated in May 2024, encompass a 100% tariff on electric vehicles (EVs) and a 25% tariff on critical minerals, except for lithium. This tactic forms part of a broader initiative to lessen America’s dependence on Chinese imports for critical minerals pivotal to the energy transition, particularly those utilized in EVs and renewable energy technologies.
Kamala Harris has been a staunch advocate of the Biden administration’s climate policies, notably the Inflation Reduction Act. This legislation offers incentives for domestic production and the establishment of secure critical minerals supply chains. If elected, Harris is anticipated to uphold the current administration’s stance, strategically employing tariffs to advance climate objectives. This is likely to involve the continued imposition of targeted tariffs on specific products crucial to the energy transition, thereby stimulating domestic production and reducing reliance on China. Harris’s potential administration would likely view tariffs as a tool to promote sustainable development and achieve climate goals, aligning with international commitments such as the Paris Agreement. By concentrating on specific products, her administration could aim to strike a balance between the necessity for critical minerals and the overarching objective of decarbonizing the U.S. economy.
In contrast, Donald Trump has indicated that a potential return to office would see his administration adopt a more robust and sweeping tariff approach. Trump has previously voiced support for a 60% or higher tariff on all goods imported from China, coupled with a 10% tariff on all U.S. imports. This broad strategy reflects Trump’s enduring skepticism of trade with China and his administration’s emphasis on shielding U.S. industries from foreign competition. A Trump administration would likely implement extensive tariffs across various products, including critical minerals, without the targeted focus observed in the current administration.
According to Scot Anderson, energy and natural resources metals and mining subsector head at Womble Bond Dickinson, Vice President Harris responded to Trump’s tariff proposals by stating that they would result in higher prices on essential goods, effectively acting as a tax on everyday necessities. Policy experts suggest that Trump’s approach could lead to increased tariffs on all critical minerals imported from China, irrespective of their role in the energy transition. This policy might be construed as part of a broader strategy to diminish the U.S. trade deficit with China and safeguard domestic industries.
The continuation or intensification of tariffs on critical minerals under either administration could offer advantages to U.S. producers. Companies like Pure Lithium Corp., a Massachusetts-based lithium firm, perceive tariffs as advantageous for attracting investors and fostering domestic production. Tariffs can establish market certainty, which is critical for companies seeking to expand operations in the U.S. The potential disparities in tariff policy between Harris and Trump underscore the broader discourse on how the U.S. should approach trade and industrial policy within the context of the energy transition.
Harris’s persistence with targeted tariffs would likely concentrate on achieving climate objectives and reducing reliance on China for critical minerals. Conversely, Trump’s expansive tariffs might prioritize safeguarding U.S. industries but at the expense of higher costs for clean energy technologies. As the presidential election looms, the competition to secure critical minerals essential for clean energy production is intensifying. Whether Donald Trump or Kamala Harris emerges victorious, the subsequent administration must prioritize strengthening the U.S.’s position in the global race for these crucial resources.
Africa boasts over a fifth of the world’s reserves of vital minerals like cobalt, copper, nickel, and lithium. However, China has established a more substantial presence in Africa, with a greater number of operational mines on the continent compared to the U.S., leaving America susceptible to potential supply disruptions and price fluctuations in these critical supplies. To counter China’s dominance in Africa’s critical mineral sector, the U.S. must forge strategic partnerships and trade agreements with African nations.
One key initiative in this endeavor is the African Growth and Opportunity Act (AGOA), a flagship U.S. program that grants nearly 40 sub-Saharan African nations duty-free access to the American market. African trade ministers have called for a swift renewal of the AGOA agreement, advocating for an extension of at least 16 years with minimal alterations to stabilize commerce, boost investment, and preserve regional value chains. The U.S. has a significant opportunity to narrow the gap with China, particularly as foreign-direct investment into Africa’s extractive industries declines.
As the U.S. approaches the 2024 election, the future of tariff policies on critical minerals remains a pertinent issue. Both Harris and Trump are poised to utilize tariffs as a means to address trade imbalances with China, yet their divergent approaches reflect broader visions for the U.S. economy and its role in the global energy transition.
