Why Price Controls on Rare Earths Won't Help America

A recent proposal to set price floors on rare earth minerals might seem like a good idea to some. The goal is to push back against China's restrictions on these vital resources. However, this approach could backfire, hurting American industries and failing to change China's policies. Price controls, like the ones proposed, are not a new idea. They have been used in the past, but often with mixed results. In this case, the idea is to prevent China from selling rare earths at low prices to American businesses. This would give a boost to MP Minerals, the only rare earth miner in the U. S. , which recently got a 15% stake from the federal government. But there are big questions about how these price floors would work. The Trump administration has not yet said which goods would be affected, how high the prices would be, or what legal authority the president has to set these prices without Congress. Price floors might seem similar to tariffs, but they come with their own set of problems. They could be less likely to be struck down by courts, but they are still a form of protectionism. Instead of using price controls, the U. S. should focus on making its own mining industry more competitive. The real issue is not a lack of rare earth minerals. They are found all over the world, including in the U. S. The problem is that it is very hard to open new mines in America. On average, it takes 29 years to go from discovering a mineral deposit to actually producing it. A big part of this delay is the permitting process, which can take seven to ten years. The Trump administration has taken some steps to speed up this process. They added key mining projects to the FAST-41 program, which makes the environmental review process more coordinated. But there are still exemptions that mostly benefit lobbyists. To truly compete with China, the U. S. needs a permitting process that is broad-based and technology-neutral. This would allow a wide range of projects to benefit from a more streamlined process and encourage innovative ways to protect the environment. Decades of anti-production policies have put U. S. mining in a tough spot, and price controls won't fix that. China's actions on rare earths are a problem, but tariffs, price controls, and industrial policy won't solve it. The best way to ensure that America's technology, defense, and electric vehicle sectors have the rare earths they need is through deregulation and openness.