EU, US near critical minerals pact to counter China’s grip

The European Union and the U.S. are nearing a deal to coordinate critical minerals production and supply chains, aiming to reduce reliance on China.

The proposed agreement, reported by Bloomberg News on Friday, would introduce incentives such as minimum pricing mechanisms to support non-Chinese suppliers, according to a draft action plan seen by the news outlet. 

The plan also calls for cooperation on standards, investment and joint projects, along with coordinated responses to potential supply disruptions from countries such as China.

The two sides are also seeking to enlist other “like-minded” partners into a broader multi-country accord aimed at building resilient supply chains for critical minerals, which are essential for technologies ranging from missile systems and fighter jets to electric vehicles and renewable energy infrastructure.

The talks come despite mounting strains in transatlantic relations, with disagreements over security, trade and political interference weighing on ties between Washington and Brussels. Tensions have escalated over U.S. pressure on European allies to support conflicts such as Iran, alongside concerns about Washington’s commitment to NATO and criticism of U.S. political involvement in EU affairs.

Not all smooth

Trade disputes have added to the friction, including tariffs and lingering disagreements over past issues such as Greenland, leaving the partnership at one of its lowest points in years. The EU has also delayed approval of a trade deal reached with the Trump administration last summer, with the U.S. still awaiting tariff reductions on a range of industrial goods.

Even so, both sides appear aligned on the urgency of securing access to critical minerals after Beijing imposed sweeping export controls last year, including restrictions on rare earths in response to U.S. tariffs. The measures disrupted global supply chains and forced some European manufacturers to halt production.

While key details of the proposed framework remain unresolved — including price floors, subsidies and purchase guarantees — the draft plan signals a long-term commitment to building alternative supply networks. It would complement a similar agreement with Mexico and echoes earlier statements from the EU, U.S. and Japan in February, suggesting groundwork for a broader critical minerals trade pact.

The emerging strategy reflects a growing recognition among Western allies that securing stable access to critical minerals is central to economic security, defence readiness and the energy transition, even as broader political divisions persist.