The listeners to the MacroEdge Radio show via X-Spaces might come to the conclusion that this author is pro-globalism and anti-tariffs. That is the furthest thing from the truth but the absurdity of the policy approach to using our tariffs via the everything needs a hammer because it looks like a nail strategy is flawed in so many ways.
More on that in a later posting.
Today’s example can best be presented in a single story which was sourced originally to the Financial Times about Trump’s new idea to acquire rare earth minerals. Here is the X posting from the unfairly maligned Walter Bloomberg (@DeItaone):
As one who deals with logistics and the supply chain on a daily basis, at least until the trade war destroys it, the absurdity of this statement can be highlighted by some basic facts.
The current list of the top 8 countries by rare earth mineral reserves is as follows:
- China
- Brazil
- India
- Australia
- Russia
- Vietnam
- United States
- Greenland
(Data via NASDAQ Investing News Network)
This of course explains the intent interest in acquiring Greenland by the Trump administration. For the record, even if the US did acquire Greenland and active surface mining operations were underway, the combined reserves of the two nations would still not surpass those of Russia or Vietnam based on current estimates.
Unfortunately for President Trump, who is not being served well by his advisors, the idea of accessing deep sea critical metals is not an original idea. The amount of rare earth or critical metals being mined by the United States can be summed up in these two quotes from a research paper listed below:
Commercial deep-sea mining on the high seas has not yet started.
Oh, so those “stockpiles” are at a minimum of five years away from even starting. No problem, right, we’ve invested billions of dollars to rapidly modernize and accelerate a sea bed mining program:
The U.S. has not invested commensurate resources in this area, and currently is not as close to being able to benefit from the start of deep seabed mining.
Both quotes are from “Race to the Deep on Seabed Mining” by the Stimson Center, a Washington, DC think tank published on November 19, 2024.
While the masses and Wall Street pump and dumpers think these statements or quotes are indicative of a coherent policy, the logistics and research to even consider startup operations are beyond the scope of most citizens much less corporations. If there was a profitable method for extracting such minerals from the sea bed, operations would have commenced many years ago.
The reason this is a fallacy is that our country has not even accelerated programs in the first Trump administration nor since the Bush era to extract rare earth minerals on dry land inside of the US, much less looking offshore.
Meanwhile, the bogeyman for Trump, China has leaped ahead of the US once again, from the same Stimson Center paper linked above:
Though difficult to access, China has prioritized seabed mining by investing heavily in technologies and furthering exploration. In 2016, China’s President Xi Jinping stated that the nation must get its hands on the hidden treasures of the ocean.10 China holds five seabed mining exploration contracts, the highest number of any ISA member.11 Additionally, a Chinese-based company, the Jinhang Group, has attracted millions in early-stage investments and signed a series of contracts to develop China’s first commercial deep-sea mining robot by 2025.
Unless President Trump along with his economic team and the do nothing GOP in the Congress gets their act together by passing permanent legislation to incentivize infrastructure modernization and regulatory reform, these statements will continue to ring as empty threats in the international echo chamber.
For the unaware, that means a bluff, and China’s Xi plus many other leaders are now realizing Trump can be called on almost every bluff in the trade war at this time. This is primarily because of the incompetence of the GOP and Democrat leadership on the hill along with the incoherent variations in the administration’s daily trade policy declarations.
