Trump’s Tariffs Are Wrecking America’s Supply Chain for Critical Minerals

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The Trump administration’s latest round of tariffs is drawing scrutiny, but the real concern isn’t just the cost of Chinese EVs—it’s the impact on the materials those tariffs affect. Nickel, cobalt, and platinum-group elements (PGEs) are indispensable to the U.S. economy, yet the country is overwhelmingly reliant on imports, often from nations it is now targeting with trade restrictions. These metals power everything from electric vehicle batteries to jet engines and oil refineries, but the new tariffs raise questions about whether the U.S. is inadvertently deepening its supply chain crisis.

Lyle Trytten, better known as ‘The Nickel Nerd,’ recently highlighted the issue on LinkedIn, noting that the U.S. has now placed itself at odds with countries that supply 60 to 80 percent of its nickel, cobalt, and PGEs. With Canada, Mexico, China, Europe, and South Africa all facing some degree of friction, the supply chains underpinning critical industries are under strain. The question now is not whether disruptions will occur, but how severe the consequences will be.

The United States currently depends on foreign sources for between 70 and 100 percent of its supply of these critical minerals. Nickel, essential for stainless steel and lithium-ion batteries, is primarily sourced from Indonesia, the Philippines, Canada, and Russia, with Indonesia alone accounting for over a third of global production. Cobalt, used in aerospace alloys and electric vehicle batteries, is overwhelmingly mined in the Democratic Republic of Congo (DRC), which supplies over 70 percent of the world’s output, before being refined predominantly in China. The United States has historically relied on imports from Canada, Norway, and Australia for cobalt, but these sources account for only a fraction of the total demand.

PGEs, including platinum, palladium, and rhodium, are primarily produced in South Africa, which supplies nearly 70 percent of global platinum output, and Russia, which has dominated palladium production for decades. Zimbabwe has also emerged as a notable supplier of PGEs, though its exports remain relatively small in comparison. The supply chains for these minerals are not only fragile but concentrated in the hands of a few countries, making them highly vulnerable to geopolitical shifts, trade restrictions, and export controls.

Trade disputes have already placed significant pressure on these supply chains. The Trump administration’s 2025 tariff proposals — aimed at bolstering domestic manufacturing, punishing weaker countries, boosting the Presidential ego or some combination of the above — have further complicated the situation. While tariffs on nickel, cobalt, and PGEs have been discussed, there remains uncertainty over whether they will be fully implemented or only selectively applied. Some sources suggest that duties on refined nickel from China and Russia are all but certain, while others indicate that tariffs on PGEs and cobalt remain under debate due to potential industry backlash.

Even where tariffs have not yet been enacted, industries must prepare for them, as businesses must factor in trade policy risks when planning supply chains. The result is that between 60 and 80 percent of America’s imports of nickel, cobalt, and PGEs now come from countries with which relations are strained. Canada and Mexico, traditionally stable suppliers, have faced increasing trade friction, while allies in Europe are pushing back against broader U.S. industrial policies. South Africa, though not directly embroiled in the tariff debate, remains a wildcard in the long-term reliability of supply. Regardless of whether full tariffs take effect, the lack of clarity itself is causing disruption, forcing manufacturers to seek alternative sources, reconsider supply agreements, and assess the long-term viability of relying on imported materials.

If current tensions escalate further, the economic impact will be profound. The automotive industry, already dealing with supply chain disruptions and rising costs, could see EV battery prices surge as nickel and cobalt become more expensive. Nickel is a crucial component of lithium-ion battery cathodes, particularly in high-performance batteries used in long-range electric vehicles. Cobalt, while increasingly being reduced in battery chemistry, remains an important stabilizer, ensuring battery longevity and safety. Most of the world’s nickel supply comes from Indonesia, Russia, and Canada, while cobalt is overwhelmingly sourced from the Democratic Republic of Congo and refined in China. Shifting to alternative suppliers like Australia or Brazil is possible but would take years of investment in new refining capacity.

The aerospace sector, which relies on cobalt-based superalloys for jet engines and gas turbines, would face similar pressures. Cobalt’s high-temperature resistance makes it indispensable for aircraft engines, military jets, and space applications. The current leading suppliers of aerospace-grade cobalt are Canada and Norway, but with refining controlled largely by China, rerouting supply chains is complicated. If cobalt prices rise or availability shrinks, aircraft manufacturers could face higher costs, production delays, or even difficulties securing necessary materials. Unlike the automotive sector, where battery chemistries can evolve to reduce cobalt dependence, aerospace alloys have few substitutes, making them particularly vulnerable to supply shocks.

Oil refineries and chemical manufacturers, which depend on PGEs for catalysts, could see production costs rise, potentially increasing gasoline and consumer goods prices. Platinum, palladium, and rhodium are essential for refining crude oil into gasoline and petrochemicals, as well as for manufacturing fertilizers, medical equipment, and advanced polymers. The vast majority of PGEs come from South Africa and Russia, with smaller contributions from Zimbabwe and Canada. Finding alternative sources for PGEs is difficult because these elements are rare and often mined as byproducts of other metals, meaning production cannot be quickly scaled up elsewhere.

Inflation, already a persistent concern, could be further exacerbated by soaring raw material costs. Rising prices for nickel, cobalt, and PGEs will trickle down into consumer goods, including electronics, vehicles, and industrial equipment. Without stable supply chains or alternative sources, American manufacturers may struggle to maintain competitive pricing, leading to economic pressure across multiple sectors. Whether through increased costs passed on to consumers or potential slowdowns in production, the impact of disrupted mineral supply chains will be felt throughout the U.S. economy.

Could the United States offset these risks by ramping up domestic production? The short answer is no—at least not in any meaningful timeframe. The country has some deposits of nickel, cobalt, and PGEs, but mining them presents significant challenges. Opening a new mine in the U.S. is a notoriously slow process. On average, it takes nearly 29 years from discovery to production, one of the longest timelines globally. Even if the permitting process were expedited, the U.S. simply does not have enough high-quality deposits to replace foreign imports. The three nickel projects currently proposed in Minnesota, for example, could supply less than half of the 100,000 metric tons of new nickel needed annually. Cobalt reserves in the U.S. are minimal compared to those in the DRC, and domestic PGE production is limited to a handful of mines, covering only a fraction of demand.

Beyond mining, processing and refining capacity present another significant hurdle. The U.S. lacks the infrastructure to convert raw ore into battery-grade nickel and cobalt. Most of the world’s refining capacity for these materials is concentrated in China, which has already demonstrated its willingness to impose export restrictions on critical minerals. Even if raw materials could be sourced elsewhere, the lack of domestic refining facilities would force American manufacturers to rely on overseas processing, negating the benefits of local extraction.

The decline of Western mining, mineralogy, and metal refining programs has only exacerbated this issue. Gavin Mudd, in a recent discussion on the Redefining Energy – Tech podcast with me, pointed out that decades of policy decisions deprioritizing resource extraction and processing in favor of cheaper, outsourced supply chains have left the U.S. and its allies vulnerable. This problem extends beyond physical infrastructure—it is also a human capital and intellectual property crisis. As China and other nations invested heavily in training metallurgists, geologists, and chemical engineers, Western universities scaled back programs in these fields, leading to a loss of expertise.

The departure of talent from mining and refining sectors has made it even harder for the U.S. to rebuild domestic capacity. Many of the most experienced professionals have retired or moved abroad to work in better-funded, more active industries. This has resulted in a skills gap that cannot be easily closed, even if funding were available to restart domestic projects. At the same time, Western firms have lost access to key intellectual property in mineral processing and metallurgy, much of which has been developed and refined in China over the past two decades. Without deep institutional knowledge, even ambitious plans to re-establish domestic mining and refining face serious operational risks. Without a major shift in policy, investment in education, and industry incentives, the West risks not only dependency on adversarial nations for critical materials but also a continuation of the long-term loss of expertise needed to process them.

Faced with these challenges, U.S. industries are pursuing alternative strategies. One approach is diversification—shifting supply away from politically fraught sources toward more stable partners. Australia, Brazil, and Norway are being explored as alternative nickel and cobalt suppliers, while South Africa remains a key source for PGEs. However, these countries alone cannot fill the gap left by reduced imports from China and Russia. Moreover, logistical constraints and limited refining capacity outside of China mean that shifting supply chains is not a simple solution.

Recycling offers another potential avenue to reduce dependence on imported materials. The U.S. already recovers some nickel, cobalt, and PGEs from scrap, but recycling rates remain low. Investments in battery recycling, for example, could provide a secondary source of nickel and cobalt, reducing reliance on newly mined material. Similarly, improved recovery of PGEs from used catalytic converters could supplement imports. However, scaling up recycling infrastructure will take time and investment, making it a medium- to long-term solution rather than an immediate fix. And, once again, the skilled and knowledgeable human resource and the intellectual capital are concentrated in China.

Another strategy under consideration is material substitution. Battery manufacturers are already exploring alternatives to nickel- and cobalt-based cathodes, such as lithium iron phosphate (LFP) batteries, which do not require these materials. LFP batteries are increasingly gaining traction in the U.S., where Tesla has adopted them for its standard-range Model 3 and Model Y vehicles. Ford has also announced a $3.5 billion investment in a Michigan-based LFP battery factory, signaling a broader industry shift. While LFP batteries offer cost advantages and reduce reliance on critical minerals like nickel and cobalt, they typically have lower energy density than nickel-based counterparts, which can limit vehicle range. Despite these trade-offs, their adoption is expected to grow, helping to ease supply chain pressures and mitigate dependency on volatile global markets. In other sectors, researchers are working on developing new catalytic materials that use fewer PGEs, but these efforts are still in their early stages. While substitution may reduce demand over the long term, it is unlikely to fully replace the need for nickel, cobalt, and PGEs in the foreseeable future.

The economic impact of these supply chain risks extends beyond specific industries. Higher costs for critical minerals could contribute to inflation across a range of products, from automobiles to electronics to industrial equipment. As American manufacturers struggle to secure affordable raw materials, they will lose competitiveness on the global stage, leading to production cutbacks and job losses. The risk of supply disruptions also raises national security concerns, as these materials are essential for defense technologies, including aircraft, satellites, and advanced weaponry.

During the Biden administration, efforts were made to mitigate critical minerals supply chain risks through strategic investments and policy measures. The Defense Production Act was invoked to fund critical mineral projects, including exploration and refining capacity expansions. The Inflation Reduction Act contained provisions designed to incentivize domestic production and processing of key minerals, aiming to reduce reliance on foreign suppliers. Meanwhile, international partnerships, such as the Minerals Security Partnership, sought to create more resilient global supply chains by coordinating investment in critical mineral projects across allied nations.

However, these measures are now being subverted under the Trump administration, which has deprioritized many of these efforts in favor of aggressive tariffs and a protectionist trade stance. The shift in policy has led to uncertainty in the investment landscape, with some projects facing delays or reconsideration. The Minerals Security Partnership, which was meant to bolster cooperation with allies, is now being sidelined in favor of bilateral trade pressure, creating new frictions with key suppliers. As a result, the long-term strategy for securing critical mineral supplies is now in question, and American industries remain vulnerable to supply disruptions and price volatility.

The Trump administration’s 2025 tariffs have become a defining factor in the critical minerals supply chain, introducing new risks and uncertainties for American industries. While the stated goal is to encourage domestic production and reduce reliance on foreign suppliers, the reality is far more complex. The tariffs create a ripple effect, raising costs across the supply chain and pushing key suppliers to seek alternative markets, potentially deepening U.S. reliance on adversarial nations.

Further complicating the situation, it remains unclear how aggressively the tariffs will be enforced and whether additional restrictions will be placed on raw material imports. While the administration has floated the possibility of exemptions or renegotiations with select trading partners, the lack of clarity is causing manufacturers to scramble for alternative sourcing, leading to price volatility and strained relationships with key suppliers. Rather than stabilizing supply chains, these tariffs have disrupted the careful balance established under previous policies, forcing companies to reconsider long-term investments and manufacturing strategies. Instead of securing the future of critical mineral supply, the tariffs threaten to accelerate offshoring and weaken the U.S. industrial base in the sectors that rely most heavily on these materials.

In the longer term, supply chains for critical minerals are likely to undergo significant realignments. The U.S. and its allies may invest in new mining and processing facilities in Africa and South America, reducing reliance on China and Russia. Recycling and substitution technologies will continue to evolve, gradually reducing demand for newly mined materials. However, until these changes take effect, the risks to American industry remain high.

The challenge of securing reliable supplies of nickel, cobalt, and PGEs is not just an economic issue—it is a national imperative. The Trump administration’s 2025 tariffs are actively undermining the supply chains that sustain the American economy, putting core industries at risk. The automotive sector, aerospace manufacturing, clean energy, national defense, and even Trump’s favored fossil fuel industry all depend on these critical materials, yet the administration’s trade policies are creating new barriers instead of securing stable supplies. With many of these minerals already difficult to source, further trade restrictions threaten to drive up costs, disrupt manufacturing, and cede competitive ground to global rivals. If supply chains remain vulnerable, the consequences will be felt across multiple sectors, potentially slowing technological progress and economic growth.

Instead of addressing the crisis through coordinated policy, the administration’s approach is destabilizing industries that will define the future, leaving the U.S. at risk of falling behind in the global race for technological leadership. As I noted after the election, the world moves on without the USA as it declines.