【By Observer Net, Liu Bai】The U.S. style of "fair competition" and "free market" is no longer sustainable. The U.S. government is now attempting unprecedented industrial policy interventions, increasing direct control over domestic companies in an effort to counter China's dominance in rare earths and critical minerals.

On October 15 local time, U.S. Treasury Secretary Bensont disclosed this intention at a forum. He revealed that the Trump administration is seeking to strengthen control over companies in key strategic areas to respond to China's new economic initiatives.

Analysts point out that this approach marks the beginning of a new era of industrial policy in the United States, which contrasts sharply with the traditional emphasis of policymakers on "free markets" and "open investment."

The report states that as China's dominant position in the production of rare earth minerals and battery technology continues to rise, President Trump hopes to learn from China's economic strategy by holding more shares in American companies deemed closely related to national security, thereby exerting greater control over their output. The goal is to reduce America's reliance on China in sensitive technologies, thus weakening China's ability to exert pressure through technology supply chains.

Bensont said at the "Invest in America" forum hosted by CNBC that when facing an economy like China, industrial policy must be used.

Bensont stated that China announced new export controls on rare earths last week, which is one of the reasons why the U.S. must strengthen state control over companies. "When we saw China's announcement on rare earths this week, we realized we must achieve self-sufficiency or ensure sufficient supply together with our allies," he said.

Bensont attending the event

The Trump administration has already invested in several key enterprises, including U.S. Steel, Intel, rare earth mining company MP Materials, and Trilogy Metals. At the same time, he also requested to take a share of revenue from chip sales by NVIDIA and AMD in China.

Bensont said establishing a "strategic mineral reserve" is a priority, and he mentioned that JPMorgan Chase is interested in cooperating with the government.

He said the Trump administration has identified seven strategically significant industries, and the government may further strengthen its control in these areas. He specifically mentioned the defense industry, pointing out that the U.S. government is the largest or even the sole customer for some defense companies, and therefore can ask companies to reduce stock buybacks and increase R&D investment.

"I do believe our defense companies are seriously lagging in deliveries," Bensont said.

Sarcasm is that this policy of pushing for stronger government control over the private sector was once scorned by Bensont.

For example, last year, Bensont gave a speech at the Manhattan Institute, once mocking the Biden administration's subsidies for strategic sectors like semiconductors as "central planning." He also criticized China for taking similar strategies, saying, "We will not let China try to control the global supply chain."

Nikkei Asia also noted that to build a domestic supply chain, the U.S. government is investing in mining companies, reducing dependence on China in critical resources.

The U.S. Department of Defense and Department of Energy are intervening in the private sector, a practice usually only adopted during full-scale emergencies, based on laws that allow direct investment in defense-critical enterprises.

In July, the U.S. Department of Defense agreed to invest $400 million, becoming the largest shareholder of MP Materials, which operates the only currently operating rare earth mine in the U.S. The Trump administration will provide strong support to this business, including setting a 10-year price floor for the company's magnet materials.

Some Western industry insiders said that the U.S. government's investment in MP Materials indicates that the U.S. government is willing to break the "free market" concept and imitate China's model when necessary to counter China.

"We have seen that the disadvantages of pure free-market models compared to long-term market models driven by industrial policy are very obvious. The current situation requires change," said Ryan Castiglioni, founder of Adamas Intelligence, a key mineral market research company.

This month, the U.S. Department of Defense reached another agreement to invest in Canadian mining company Trilogy Metals, which has mining rights in Alaska.

However, the Trump administration's energy policy may weaken the market demand relied upon by suppliers.

Private sector demand will be key to the U.S. establishing a rare earth supply chain. A report by the U.S. Department of Commerce points out that there is "high uncertainty in demand" for magnets in the U.S., and warns that U.S. companies may continue to use cheaper Chinese magnets.

The International Energy Agency (IEA) estimates that with the rapid proliferation of electric vehicles and wind turbines, global rare earth demand for magnets will reach 180,000 tons by 2050, doubling from 90,000 tons in 2024. The IEA believes that technologies related to decarbonization will account for about 30% to 40% of global demand.

But the Trump administration cut subsidies for wind power and ended incentives for electric vehicle purchases. In a report this month, the IEA predicted that U.S. renewable energy capacity will be 250 gigawatts by 2030, half of the previous forecast.

In 2023, the Biden administration's Department of Commerce released a report on neodymium magnets, stating that competition with Chinese prices is a "major obstacle" to domestic production.

Some people believe that the defense industry will become a growing buyer of rare earths, which are used in stealth fighters and cruise missiles. However, a report from the U.S. government last year stated that the U.S. Department of Defense has "limited influence" over the rare earth market, with its demand accounting for less than 0.1% of global supply.

Additionally, high labor costs, lack of personnel with the necessary skills, and environmental regulations are challenges that the U.S. must overcome to revive its rare earth supply chain.

"From acquiring shares in Intel to seeking to invest in Lithium Americas, the Trump administration is drawing on China's industrial policies," the Hong Kong English media South China Morning Post previously noted. The U.S. government is increasingly wielding the "visible hand" of the government in what it prides itself on as a so-called "free market," a strategy that has long been associated with China.

"I think the U.S. government is trying to learn from China's experience," said Brian Wong, a researcher at the Center for Contemporary China and World Studies at the University of Hong Kong.

Rajiv Biswas, CEO of Asia-Pacific Economics, also agrees, noting that recent U.S. measures highlight a policy orientation leaning toward "interventionism."

Analysts say that the Trump administration's recent embrace of industrial policy reveals rising concerns in the U.S. about the vulnerability of global supply chains. However, the U.S. has not implemented industrial policy for over 40 years, and it may no longer know how to do it.

Mark Smith, CEO of NioCorp Developments, a U.S. mineral mining company, said it would take 29 years to open a rare earth mine in the U.S.

"You might spend your whole life getting a mine up and running," he said.

This article is an exclusive article from Observer Net, and it is not allowed to be reprinted without permission.

Original: https://www.toutiao.com/article/7561618008846778915/

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