The Trump administration announced Tuesday it will establish a $12 billion strategic stockpile of critical minerals, marking Washington's most aggressive effort yet to reduce dependence on China's dominance of supply chains essential to defense systems, electric vehicles, and advanced electronics.
The initiative, revealed in an executive order signed at the White House, targets minerals including lithium, cobalt, rare earth elements, and graphite—materials where China controls between 60 and 90 percent of global refining capacity. The stockpile represents a fundamental shift in U.S. industrial policy, one that forces East Asian allies to navigate between their security guarantor and largest trading partner.
For Japan, South Korea, and Taiwan—three democracies heavily invested in semiconductor and battery manufacturing—the American move creates acute strategic tension. All three economies depend on China for critical mineral imports while relying on the United States for security guarantees. Tokyo received 58 percent of its rare earth imports from China in 2025, according to Japan's Ministry of Economy, Trade and Industry.
The stockpile plan allocates funding over five years to purchase and store minerals deemed essential to national security. Administration officials indicated the reserves would be available to U.S. manufacturers and "trusted allies," though criteria for access remain undefined. The move follows China's December export restrictions on gallium and germanium—materials critical to semiconductor production—which Beijing framed as a response to American chip export controls.
South Korea's conglomerates face particularly acute exposure. Samsung and LG Energy Solution, major players in EV battery production, source significant quantities of processed cobalt and lithium from Chinese refiners. Industry analysts estimate that fully severing Chinese mineral supply chains would increase battery production costs by 30 to 40 percent, threatening the competitiveness of Korean manufacturers.
Taiwan, despite its dominance in advanced chip manufacturing through TSMC, remains dependent on Chinese rare earth elements used in chip fabrication equipment. The island's Ministry of Economic Affairs has accelerated talks with Australia and Vietnam on alternative sourcing, but substitution timelines stretch across years, not months.
Japan has pursued the most proactive diversification strategy among the three, investing heavily in rare earth extraction projects in Australia, India, and Kazakhstan since China's 2010 export restrictions during the Senkaku Islands dispute. Tokyo has also pioneered rare earth recycling technology and urban mining—extracting minerals from discarded electronics. Yet even Japan's stockpiles cover only months of industrial consumption.
The American stockpile initiative arrives as supply chain decoupling—or what Chinese analysts call 脱钩 (tuogou, "unhooking")—accelerates beyond semiconductors into the broader materials economy. Beijing has responded to Western restrictions by consolidating control over downstream processing, even for minerals mined outside China. Indonesian nickel ore, for instance, increasingly flows to Chinese-owned refineries in Sulawesi.
Industry observers note the $12 billion allocation, while substantial, remains modest compared to the scale of U.S. mineral consumption. The figure represents roughly what the American defense industry alone consumes in critical minerals over 18 months. Questions persist about whether Washington will combine stockpiling with investments in domestic processing capacity—the capital-intensive, environmentally challenging segment where China built dominance over two decades.
For East Asian manufacturers, the strategic calculation grows more complex. Aligning with U.S. supply chain initiatives offers political benefits and potential access to American reserves, but risks Chinese retaliation through export restrictions or market access limitations. Beijing demonstrated this leverage in 2023 when it restricted graphite exports following Japan's expanded chip controls.
The mineral stockpile represents a broader American effort to rebuild strategic industries after decades of offshoring. Yet the initiative's success depends substantially on whether allied democracies can coordinate parallel diversification efforts—and whether they can move faster than China can consolidate control over remaining supply chains.
Watch what they do, not what they say. In East Asian diplomacy, the subtext is the text. Seoul, Tokyo, and Taipei are now watching to see whether Washington's $12 billion commitment comes with coherent execution—or whether it represents another American industrial policy announcement that fades as implementation challenges mount.
