© Supplied by Shawn Thew /EPA-EFE/ In April, the US launched a tariff war on many of its large trading partners, as well as a baseline 10% tax on imports from other countries.
But soon after, tariffs for many countries were later paused for 90 days pending the outcome of negotiations with many of the countries on president Donald Trump’s hit list.
Whether or not the global trades book will be rewritten as a result of the tariffs onslaught, many key critical minerals are currently exempted from such charges so far remain unaffected.
This is because the US is highly reliant on foreign supplies, largely for use in new energy, electric vehicles (EVs), consumer electronics, communications systems and so forth.
Copper, lithium, nickel, cobalt, manganese, natural graphite, silicon, rare earth elements and pet coke were all announced as exempt, and in most cases, this exemption includes all forms of imports, from ores to refined metals and sulphates.
According to the International Energy Agency (IEA) in its latest Global Critical Minerals Report, the US is 100% dependent on imports to meet its demand for refined nickel products and battery-grade manganese sulphate.
It also satisfies less than 5% of domestic battery-grade graphite demand and less than 25% of domestic demand for refined cobalt and rare earth elements.
As Trump started his tariff war, he also signed an executive order, launching a probe into the need for tariffs on critical minerals.
© Supplied by Watercycle Technolog“If the investigation finds imports of processed critical minerals, including derivative products, impair national security, specific tariffs may be applied,” warns the IEA.
“This builds on a previous probe ordered in February into copper imports with tariffs being a potential outcome.
“Although the direct effects of tariffs are limited for the moment, critical mineral markets could nonetheless be affected by broader economic uncertainty, as well as policy moves that could weaken US consumer demand for EVs and battery storage.”
Coupled with higher prices from tariffs on Chinese batteries (China commands 80% of global battery production) and higher domestic battery manufacturing costs, this could slow battery-critical minerals demand, including lithium, nickel, cobalt and graphite, according to the agency.
Importantly, it points out that the copper market is also tied to the health of the global economy and industrial activities, being driven by construction, energy technologies and industrial equipment.
Lower short-term demand could amplify longer-term risks on the supply side by deterring or delaying new supply investment.
And the agency says that, last year, over 90% of lithium-ion battery storage cells deployed in the US were from China, almost entirely consisting of lithium iron phosphate (LFP) cells, which are not produced anywhere else at scale.
With the new tariffs, Chinese LFP cells now face effective import charges over 40%, amid limited domestic US manufacturing capacity.
Some of this may be absorbed by Chinese players reducing margins, however, as things stand, the IEA calculates that the likely outcome is to drive up costs for utilities and/or to delay deployment.
This may also result in Chinese batteries and energy technology products being pushed to other markets such as Europe and Southeast Asia.
© Supplied by Shutterstock / IM ImIn Europe’s case, LFP battery technology is also gaining traction, especially in EVs and energy storage, due to its lower cost and safety compared to traditional nickel-rich batteries. There is a growing hunger for this driver technology.
Such competition could lead the US to backtrack on its LFP levy plans, simply to keep its majority grip on the supplies it needs. But then again, perhaps not.
The IEA warns that, if the new tariffs are imposed for an extended period, there is potential for the creation of a segmented market for energy technologies.
“High tariffs on China-dominated products like LFP batteries would raise the price floor in the United States, shielding the domestic market from competition with Chinese imports,” it says.
“This could help de-risk domestic production projects,” says the IEA in its report. And security of supply on its own terms is a key US tariffs war objective.”
The IEA also says that policymakers have woken up to these energy security challenges with a wave of new policy initiatives.
As a result, governments around the world are intensifying efforts to secure critical mineral supplies through public funding, strategic partnerships and domestic policy reforms.
And the US has issued a series of executive orders to expedite permitting and increase investments in domestic projects.
The European Commission too has designated 47 strategic projects under the EU Critical Raw Materials Act to fast-track development and enhance financing access.
And the IEA itself has launched a new Critical Minerals Security Programme to address key vulnerabilities.
