The administration of U.S. President Donald Trump plans to set price floors across a range of industries to combat market manipulation by China.
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A price floor is the lowest legal price that can be charged for a good, service, or labor. It is a type of price control set by governments to prevent prices from falling below a certain level, which can help support producers and prevent them from going out of business.
News of the Trump administration’s plans for price floors was announced by U.S. Treasury Secretary Scott Bessent. He argues that China has driven foreign competitors in the rare earths industry out of business by using its global dominance in refining and processing to reduce prices.
Rare Earth Issues
“When you are facing a non-market economy like China, then you have to exercise industrial policy,” Bessent said during a media interview. “So we’re going to set price floors and the forward buying to make sure that this doesn’t happen again and we’re going to do it across a range of industries.”
Rare earth metals, minerals, and magnets are used to produce U.S. technologies such as electric vehicles, as well as weapons systems like the Tomahawk cruise missile. The Trump administration has been working to develop a domestic rare earth supply chain, but remains reliant on China, the world’s dominant producer.
China last week announced new restrictions on rare earth exports for military purposes ahead of an expected meeting between President Xi Jinping and President Trump in South Korea later in October. In response, Trump has threatened 100% tariffs on all Chinese imports effective Nov. 1.
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