Relating to specifics, the US authorities ought to impose totally different tariff charges for mined minerals (e.g., ores, concentrates) and refined minerals (e.g., metals, chemical compounds). The US authorities must also use tariff fee quotas and part within the tariffs over two tranches to reasonable the worth shocks on downstream US companies, permitting time for them to adapt their provide chains and for upstream mineral corporations to broaden current US mines and refineries and to develop new US mines and refineries.
A tariff fee quota permits a selected quantity of products to be imported at decrease tariff charges throughout the quota interval; after the quota is met—that’s, after the quota interval—larger tariff charges apply. In the course of the quota interval, the US authorities ought to impose decrease tariff charges on mineral imports with probably the most resilient provide chains. Evaluations of import resilience ought to contemplate elements like jurisdictional dangers and delivery routes to the USA, with the corresponding tariff charges incentivizing imports with probably the most resilient provide chains. For instance, throughout the quota interval, minerals produced in Canada would face the bottom tariff charges given Canada’s low jurisdictional dangers and its proximity and overland delivery routes to the USA, whereas minerals in China would face the very best tariff charges given the dangers of Chinese language export controls. After a quota is met, the next tariff would apply that makes all imports of the mineral cost-prohibitive.
For the primary tranche of tariffs looking for to extend US mining, the US authorities ought to impose tariff fee quotas on imports of ore and focus. The US authorities may use the next components to calculate the quantity of ore and focus that may enter the USA yearly at tariff charges primarily based on the import resilience evaluations: US consumption of ore and focus – US manufacturing of ore and focus. The distinction is ostensibly the USA’ reliance on imported ore and focus. For instance, with titanium mineral concentrates, if the USA consumed 900,000 metric tons and produced 100,000 metric tons in a single 12 months, the US authorities would enable 800,000 metric tons of imported titanium mineral concentrates to enter the USA the subsequent 12 months at decrease tariff charges primarily based on the import resilience evaluations. After 800,000 metric tons of imports, larger tariff charges would set off making the imports cost-prohibitive.
The second tranche of tariffs on mined minerals would change the primary tranche of tariffs, and they’d be imposed three years after the imposition of the primary tranche, with the tariff fee quotas up to date yearly thereafter. The tariff fee quota components for this tranche could possibly be the next: US consumption of focus and ore – (US manufacturing of ore and focus + reserves). As an illustration, with titanium mineral concentrates, if the USA consumed 800,000 metric tons, produced 200,000 metric tons, and had reserves—that are economically recoverable deposits—of two million metric tons one 12 months, the USA theoretically has ample manufacturing and reserves of titanium mineral concentrates to fulfill US consumption the next 12 months. Subsequently, the US authorities would impose second-tranche tariffs making all imports of titanium mineral concentrates cost-prohibitive.
Importantly, the three-year phase-in interval is virtually 4 years because it takes a couple of 12 months from initiating the investigation to imposing the tariffs. This four-year interval would enable time to broaden some operational mines and construct a number of new mines that concentrate on current reserves. As a result of reserves are usually verified on the feasibility examine stage, prior mine growth steps like intensive exploration are sometimes pointless, shortening the estimated mine growth timeline to the interval from the conclusion of the feasibility examine to the conclusion of the mine development, which is about six years for a hypothetical medium-sized mining venture. This timeline may be shorter or longer primarily based on the person venture and allowing effectivity. For instance, Jervois concluded the feasibility examine for its Idaho Cobalt Operation in January 2020, and earlier than it suspended remaining development on account of low cobalt costs, it forecasted manufacturing of its first focus to happen in mid-2023, giving it a 3.5-year growth timeline after the conclusion of the feasibility examine.
Subsequent, with the primary tranche of tariffs aiming to extend US mineral refining, the US authorities ought to impose tariff fee quotas on refined minerals, which embody metals and metal-based chemical compounds. The US authorities may use the next components to calculate the quantity of refined minerals that may enter the USA yearly at tariff charges primarily based on the import resilience evaluations: US consumption of metals and chemical compounds – US manufacturing of metals and chemical compounds. The distinction is the USA’ reliance on imported metals and chemical compounds. As an illustration, with refined zinc, if the USA consumed 908,000 metric tons and produced 220,000 metric tons one 12 months, 688,000 metric tons of refined zinc can be allowed to enter the USA the next 12 months at decrease tariff charges primarily based on the import resilience evaluations. After importing 688,000 metric tons, larger tariffs would set off, making imports of refined zinc cost-prohibitive.
The second tranche of tariffs on refined minerals would change the primary tranche of tariffs, and they’d be imposed two years after the primary tranche, with the tariff fee quotas up to date yearly thereafter. To encourage self-sufficiency in mineral refining, this second tranche ought to make all imports of refined minerals cost-prohibitive. The US authorities can undertake excessive tariffs that closely disincentivize imports as a result of refining—in contrast to mining—isn’t constrained by geology. As an instance, China in 2022 solely had about 2percentof world cobalt reserves and about 1% of world cobalt mining; nevertheless, it had about 75% of cobalt refining. Thus, the US authorities can rationally impose second-tranche tariffs that search to make the USA largely self-sufficient in mineral refining.
The 2-year phase-in for tariffs on refined minerals is basically three years given the one-year timeline from initiating the import investigation to imposing the tariffs. The phase-in interval is shorter for tariffs on refined minerals than mined minerals because it takes much less time to broaden or construct a refinery than a mine. This successfully three-year interval would additionally enable time to broaden current refineries and construct new refineries. For instance, Benchmark Mineral Intelligence estimates that the timeline for constructing a lithium refinery is 2 years. As one other instance, Syrah estimates that the enlargement of its Louisiana plant that produces graphite-based energetic anode materials will take about three years from a remaining funding resolution to first commissioning.
Importantly, throughout the quota interval for each the tariffs concentrating on mined minerals and the tariffs concentrating on refined minerals, the US authorities ought to impose countervailing duties on imports of minerals produced by Chinese language corporations outdoors China, like Indonesia. Countervailing duties are tariffs that offset subsidies obtained by overseas mineral producers. These duties would stop abroad Chinese language mineral producers—which frequently obtain authorities subsidies, equivalent to concessional financing from state-owned growth and business banks—from circumventing larger tariffs imposed on mineral imports from China throughout the quota interval. As an instance how the countervailing duties would work, throughout the quota interval, tariffs on minerals imported from Indonesia would face decrease baseline tariffs than minerals imported from China, however imports of minerals produced by Chinese language corporations in Indonesia would additionally face countervailing duties.
Lastly, if the US authorities seeks to maximise the effectiveness of the mineral tariffs, it ought to deny product exclusions and countrywide exemptions from the tariffs. Product exclusions would exempt sure mineral imports from the mineral tariffs, whereas countrywide exemptions would exempt all of the mineral imports from sure international locations from the mineral tariffs. Such exclusions and exemptions would undermine the purpose of the mineral tariffs, which is to restrict mineral imports. As an illustration, with the Part 232 metal tariffs, Benjamin Blase Caryl, affiliate common counsel at US Metal, estimates that solely 15% of US metal imports year-to-date had been topic to the Part 232 tariffs on account of product exclusions and countrywide exemptions. Moreover, the multiyear phase-in intervals give companies in the USA time to adapt their provide chains to reasonable the worth results of the tariffs, precluding the necessity for particular exclusions and exemptions.
But, there are counterarguments to this draft tariff coverage. The primary counterargument is that the tariff phase-in interval isn’t lengthy sufficient for corporations to construct new mining capability in the USA. Nonetheless, the virtually four-year phase-in interval considers the timeline to extract current reserves, that are normally verified on the feasibility examine stage, obviating the necessity for a lot of extra years of intensive exploration and additional research. Certainly, after exploration and the required research, the common timeline to render a development resolution, construct, and begin up a mine was 3.8 years, in line with an S&P International examine on 127 world mines that entered manufacturing between 2002 and 2023. For the three US mines assessed within the examine, it took 4.3 years to render a development resolution, construct, and begin up the mines. Thus, commissioning new mining capability in the USA in an primarily four-year interval is feasible. As Matt Michael famous in August 2024, “Based mostly on all the hassle that went within the final two, three years with exploration and tasks being curtailed…provide would be capable to come on quite a bit faster from newer operations and scale-ups….”
Moreover, the comparatively quick phase-in intervals for the tariffs on each mined and refined minerals make implementing them politically possible: a presidential administration in a single time period can provoke a Part 232 investigation firstly of the time period, conclude the investigation, impose the primary tranche of tariffs, and impose the second tranche of tariffs earlier than the conclusion of the time period.
The second counterargument is that US companies will nonetheless rely closely on mineral imports when the US authorities imposes the second tranche of tariffs, which—if prohibitively excessive—may critically disrupt industrial manufacturing and profitability. Nonetheless, along with incentivizing home mineral manufacturing, the excessive costs of mineral imports ought to incentivize home mineral recycling and mineral substitution, together with with cheaper, domestically produced minerals. For instance, excessive costs of platinum group metals have pushed excessive recycling charges of the metals, like from car catalytic converters, and the upper worth of cobalt versus nickel has led to elevated substitution of cobalt with nickel in electrical automobile batteries. The upcoming danger of excessive costs for imported minerals ought to encourage mineral shoppers in the USA to supply home minerals, to recycle minerals, and to search out mineral substitutes.
Each a future Harris administration and a future Trump Administration appear to have accepted tariffs as part of US minerals coverage. If both presidential administration needs to make use of tariffs to extend US mineral manufacturing, the simplest tariff coverage would impose tariff charges that maximize reserve extraction and goal refining self-sufficiency in the USA. Importantly, the US authorities ought to use tariff fee quotas and part within the tariffs to reasonable the worth shocks on downstream US companies, permitting time for them to adapt their provide chains and for upstream mineral corporations to broaden current US mines and refineries and to develop new US mines and refineries. This draft tariff coverage—particularly when mixed with streamlined allowing, grants for mineral exploration, and concessional loans for mine growth, enlargement, and refining services—would assist enhance US mineral manufacturing.
* Gregory Wischer is a non-resident fellow on the Payne Institute for Public Coverage on the Colorado College of Mines. He’s additionally a non-resident fellow on the Northern Australia Strategic Coverage Centre on the Australian Strategic Coverage Institute.