A White House fact sheet from April 12, 2025, said, "Today, President Donald J. Trump declared that foreign trade and economic practices have created a national emergency. Large and persistent annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base; resulted in a lack of incentive to increase advanced domestic manufacturing capacity; undermined critical supply chains; and rendered our defense-industrial base dependent on foreign adversaries."
I would add that outsourcing has led to shortages of everything from rare earth minerals and semiconductors to antibiotics and cancer drugs. This scenario makes the U.S. vulnerable to rogue countries like China, which have the power to cut off or restrict imports at any time. Trump has made reducing U.S. dependence on foreign critical minerals a core tenet of his national security and economic resilience agenda.
The following Table 1 shows that the U.S. is 100% dependent on foreign countries for 10 critical minerals and 50% to 95% dependent on 18 other minerals. It also shows that we are dependent on China for 10 of these critical minerals. China is a source of essential minerals required for a wide range of goods, including computer chips, robots, electric vehicles, batteries, drones, and military equipment. China also dominates the refining and processing of many of these critical minerals, including lithium, cobalt, graphite, gallium, rare-earth and many others.
The world's sources of critical minerals are increasingly concentrated in just a few countries, leaving the U.S. and other Western countries vulnerable to export controls and export bans. The impact of a "supply shock" can lead to higher prices for consumers, production interruptions for manufacturers, and a stifling of a country's ability to find new sources and compete.
America's Import Reliance on Critical Minerals: Table 1 uses data from the U.S. Geological Survey (USGS) to visualize America's import dependence for 30 different key nonfuel minerals, along with the nation that exports them to the U.S.Mike Collins via USGS
Threats and risks
China has already demonstrated that it will not hesitate to impose export controls and bans on minerals it controls. In 2021, they imposed a ban on exporting graphite to Sweden and to all countries in 2023. In 2023, China banned the export of technology used in the production of rare-earth magnets.
China has also imposed restrictions on seven different kinds of antimony, on which the U.S. is 73% dependent. Antimony is a flame-retardant metal that is used in making ammunition. The U.S. has produced 3 million 155 mm shells for the Ukraine war, and restrictions in the supply of antimony could seriously affect our commitment to support Ukraine.
According to the World Resources Institute, the U.S. imports rely heavily on foreign sources for rare earth elements, graphite, lithium, and various other metals like manganese, niobium, and tantalum. China controls a significant portion of the processing of these minerals, raising concerns about supply chain security.
One example is rare-earth elements, a group of 17 minerals used in cell phones, magnets, wind turbines, batteries, electric vehicles, and military weapons systems. Approximately 85% of rare earth elements are now sourced from China, which gives them the ability to control the supply and potentially paralyze our technology and defense sectors.
The U.S. now imports 91 percent of the rare earth mineral called Lanthanum from China. China has 60 to 70% of global production and nearly 90% of refining capacity.
The small number of foreign suppliers and the lack of domestic production have made the U.S. highly dependent on China and vulnerable, as China has used rare earth exports as a tool in trade negotiations. In addition, China and other foreign producers have engaged in widespread price manipulation and export restrictions to gain economic leverage over the U.S., which poses a serious national security risk to the U.S. economy and defense preparedness.
Solutions
- Subsidies: Congress could approve a government subsidy model, similar to the Chips Act, to subsidize the U.S. minerals industry. However, the government must first select and prioritize the most essential minerals and industries.
- Tariffs: Tariffs could be used to incentivize many American corporations to reshore production. They could also provide an incentive for foreign competitors to limit or reduce export restrictions and price manipulation and mitigate critical mineral shortages.
- Increase strategic stockpiles: The United States has the National Defense Stockpile, but it doesn't include critical minerals such as lithium, cobalt, rare earth elements (REEs), and certain battery-grade nickel. Additionally, minerals like bismuth and fluorspar, as well as the metals copper and lead, which are used by the military, are not currently stockpiled. To address critical mineral shortages, the U.S. stockpile needs to be expanded.
- Finding alternative suppliers: The government is collaborating with allies, including Canada, Australia, and the United Kingdom, to secure supplies of key minerals, such as cobalt, graphite, and tungsten. However, it might require negotiating with marginal or unstable countries to find enough alternative sources.
- Recycling: The Energy Department is promoting the recycling and repurposing of older materials and tailings to extend their lifespan and reduce the need for virgin material extraction. While the potential for recovering valuable materials exists, the economic feasibility is often uncertain and varies depending on factors like mineral prices, extraction costs, and environmental regulations.
Pharmaceutical shortages
The growing U.S. dependence on China and India for widely used generic pharmaceuticals creates serious risks to national security and patient safety. The U.S. is dependent on imports for two-thirds of its generic medicines, which account for 90% of all prescriptions. America is dangerously reliant on drugs from India and China, and any restrictions on their shipments would be a disaster for hospitals and clinics.
The Department of Commerce's Section 232 National Security Investigation of Pharmaceutical Imports confirms that the U.S. has extreme overreliance on foreign pharmaceutical supplies—especially active pharmaceutical ingredients (APIs) and critical injectable drugs from China and India. Any political issues, export restrictions, or factory disruptions in China and India could lead to numerous drug shortages and immediate problems for clinics, doctors, and patients.
The drug shortage crisis is the result of decades of offshoring American drug manufacturing capacity, failures of the U.S. Food and Drug Administration (FDA) to regulate and oversee foreign drug manufacturers, and foreign governments using massive subsidies to artificially lower prices, making it impossible for American manufacturers to compete.
The American Society of Health-System Pharmacists indicates that the U.S. is already facing a severe shortage problem, which reached a high of 309 drug shortages in 2023. Some of the most damaging shortages are in generic cancer drugs used for many kinds of cancers. A 2023 study by the American Cancer Society found that one in ten patients have experienced drug shortages.
Another drug shortage example is the statin drug Atorvastatin for people with cardiovascular disease. Atorvastatin is available from nine different drugmakers, including companies based in Germany, Bangladesh, and Turkey.
All of these companies depend on one Indian company, Ind-Swift Laboratories Ltd., for the active pharmaceutical ingredients (APIs) used to manufacture Atorvastatin. Ind-Swift relies on five Chinese companies for the key starting materials (KSMs) required to manufacture the APIs. Therefore, the entire supply chain for this drug relies heavily on China. There are shortages of Atorvastatin now reported in the U.S., the U.K., and Canada.
One wonders how and why the government allowed the pharmaceutical companies to get the American health system into this dependency and the resulting shortage problems. There are two problems. First, outsourcing has led to shortages, as well as quality and safety problems. Second, outsourcing to the lowest-cost producers in Asia did not result in lower prices for consumers.
Most people are unaware that decades of outsourcing have led to a dependence on foreign countries that are both our suppliers and competitors. If a country like China were to suddenly stop all exports to America for political reasons, the U.S. would be trapped in a situation of its own making, where it could not, in the short run, come up with an alternative supply. In the case of critical medicine like cancer drugs, people would die.
The government does not yet have a plan to combat shortages. The first step should be to find ways to reclaim supply chains from China and other countries for everything from pharmaceuticals and minerals to semiconductors, aluminum, and steel. We need to pressure some U.S. companies to reshore products, put pressure on foreign countries to reduce exports to the U.S. and encourage the government to offer incentives for U.S. companies to manufacture domestically or to help find new sources in other allied countries. I don't see how we could apply this kind of pressure without tariffs or quotas.
There is legislation in Congress called the Producing Incentives for Long-term Production of Lifesaving Supply of Medicines Act, known as the PILLS Act, which would provide corporate tax credits for pharmaceutical companies to invest in U.S.-based manufacturing facilities. It is interesting to note that the pharmaceutical companies that rushed to outsource their drugs to low-cost countries and created this problem are now asking the government to offer tax incentives and low-cost loans to reshore their production – just like the semiconductor industry did in the Chips Act.
It is now apparent that the FDA has been ineffective at managing America's generic drug shortage, drug quality, or drug safety problems. They are aware of which foreign labs have experienced safety and quality issues but have been unable to regulate them, primarily due to resource limitations and the complex nature of global drug supply chains. While the FDA has the authority to inspect foreign facilities, it states that it lacks the resources to examine every facility, particularly with the growing number of overseas manufacturers.
Congress has not been very sympathetic to giving the FDA more resources and, instead, has recently eliminated 3,500 jobs as part of a larger workforce reduction within the Department of Health and Human Services (HHS). The proposed 2026 budget includes a 37% further cut to the FDA. This example illustrates the folly of across-the-board budget reductions that fail to consider the unique needs or objectives of individual agencies. It is throwing the baby out with the bathwater and ensures that we are not likely to make progress on the drug quality or safety problems in the near future.
Administering tariffs and quotas will be tricky. As pointed out earlier, China has the leverage and power to restrict or cut off many minerals and materials needed by the U.S. and will retaliate against Trump's tariffs and quotas. Hopefully, the Trump Administration will implement tariffs on specific products and industries, leaving the door open for negotiation with China to ensure we don't harm ourselves.
Michael Collins is the author of a new book, "The Globalization Trap," which will debut in September 2025. He can be reached at [email protected] or on mpcmgt.net.
