Trump's AI Pricing Bet: A Long-Cycle Play on Critical Minerals

The strategic calculus for critical minerals has shifted decisively. No longer viewed as mere industrial inputs, these materials are now treated as foundational to both economic infrastructure and national security. This reclassification is the bedrock of a high-stakes, long-cycle policy initiative. The administration is leveraging a current macro environment defined by acute supply chain vulnerability and geopolitical tension to reshape markets over the next decade.

The legal and strategic framework is clear. U.S. law, as defined by the Energy Act of 2020, designates critical minerals as those essential to economic or national security, with supply chains vulnerable to disruption. The 2025 list, finalized in November, includes 60 minerals, a sweeping inventory that anchors everything from battery metals to defense magnets. The vulnerability is stark: the U.S. is 100% net-import reliant for 12 critical minerals. This dependency is no longer a footnote; it is a declared national security threat.

The administration has formally elevated this risk to the highest policy level. On January 14, 2026, the President issued a proclamation declaring that imports of processed critical minerals and their derivative products (PCMDPs) threaten to impair U.S. national security. The rationale is direct: these materials are indispensable to almost every industry, from defense systems to consumer electronics. This finding justifies potential trade actions and industrial policy, moving the conversation from economic to strategic.

This is not a unilateral gambit. The administration is actively building a plurilateral alliance to counterbalance entrenched global power. The centerpiece is a new diplomatic architecture. On February 4, the inaugural Critical Minerals Ministerial convened 55 foreign delegations from allied and partner nations. The event launched the Forum on Resource Geostrategic Engagement (FORGE) as a successor to the Minerals Security Partnership, aiming for broader policy alignment. The stated goal is to create a preferential trade zone with coordinated price floors and tariffs, backed by a new U.S. domestic stockpile and private financing. This is a long-cycle play, using the current geopolitical fault lines to build a collective supply chain alternative over the coming decade.

The AI Mechanism: Modeling Prices for a Strategic Bloc

The administration's plan hinges on a specific technological tool: the Pentagon's Open Price Exploration for National Security (OPEN) program. Launched in 2023 by DARPA, OPEN is an AI-driven metals pricing model designed to calculate what strategic minerals should cost. Its theoretical basis is straightforward: it factors in the real costs of labor, processing, and logistics, while critically attempting to strip out the effects of alleged market distortions. The goal is to move beyond short-term price swings and establish a reference price grounded in a more transparent, cost-based framework.

This model is intended to be the linchpin for a new trade architecture. The administration plans to use OPEN's output as a benchmark to influence global trade policies. The initial focus will be on four niche but strategically vital metals: germanium, gallium, antimony, and tungsten. These materials are crucial for semiconductors, defense systems, and advanced manufacturing, and their markets are often thin and susceptible to concentrated supply, particularly from China. U.S. officials believe this concentrated production has depressed prices and discouraged Western investment.

The mechanism for enforcement is a shift away from direct subsidies. Instead, the plan proposes using tariffs as a policing tool. Imports of these minerals priced below the AI-calculated reference level could face duties, pushing global prices toward the benchmark without the need for a formal, rigid price floor. This approach aims to create a more predictable pricing environment for investors and manufacturers within a U.S.-led bloc.

The broader strategy is clear. By anchoring a new trade framework to an AI-generated reference price, the administration seeks to build a collective supply chain alternative over the coming decade. This aligns with Vice President Vance's earlier proposal for a preferential trade zone with coordinated price floors and tariffs. The OPEN AI program provides the technical foundation for that zone, offering a seemingly objective, data-driven standard to guide policy and contracts.

Yet the move is not without risk. The OECD has flagged the initiative as an AI hazard, noting that while no harm has yet been realized, the potential economic and geopolitical impacts are significant. The system's accuracy and its ability to model complex, geopolitically charged markets remain unproven. The bottom line is that this is a long-cycle play, using advanced technology to try and reshape global commodity markets in service of a strategic alliance.

Market Impact and Implementation Hurdles

The administration's AI pricing initiative carries the potential to create a powerful price anchor for key strategic minerals. By setting reference prices for germanium, gallium, antimony, and tungsten, the plan aims to support domestic producers and allied supply chains while pressuring the Chinese-dominated markets that are seen as having depressed prices. This could reduce the uncertainty that has long discouraged Western investment in these niche, high-barrier projects. The goal is to build a preferential trade zone where prices are backed by coordinated tariffs, effectively creating a new, more stable benchmark for a critical segment of the global market.

Yet the path to implementation is fraught with hurdles. The most immediate challenge is the lack of a clear enforcement mechanism. The plan relies on tariffs to uphold pricing integrity, but the exact mechanics remain undefined. How would authorities determine if a price is "below" the AI benchmark? What would be the tariff rate? This ambiguity raises serious questions about the policy's credibility and its ability to move markets without causing significant volatility. For Western mining projects, which are often capital-intensive and long-dated, such uncertainty could be a major deterrent, undermining the very investment stability the policy seeks to create.

Compounding this is the complexity of building a unified bloc. The February 4 ministerial brought together 55 foreign delegations, signaling broad diplomatic interest. But forging a collective action from this plurilateral alliance is a daunting task. Achieving uniform application of reference prices and tariffs across diverse economies with different industrial needs and trade relationships is a monumental coordination challenge. There is also the risk of fracturing existing trade relationships, as the U.S. hardline approach could alienate partners who are wary of being drawn into a new economic standoff.

The OECD has already flagged the initiative as an AI hazard, underscoring the unproven nature of using an algorithm to set global commodity benchmarks. The system's ability to model complex, geopolitically charged markets remains to be tested. In practice, the policy's success will depend less on the AI's calculations and more on the political will and diplomatic finesse required to build and sustain a credible alliance. Without that, the reference prices risk becoming little more than a symbolic gesture in a market driven by real-world supply and demand.

Catalysts, Scenarios, and What to Watch

The viability of this long-cycle play will be tested by a series of near-term events. The first concrete catalyst is the official launch of the AI pricing framework. The administration has signaled it will use the Pentagon's OPEN AI program to set reference prices for four critical minerals: germanium, gallium, antimony, and tungsten. The timing for this rollout is critical. Success depends on the U.S. Department of Defense delivering these benchmarks with sufficient clarity and credibility to serve as a foundation for future trade policy. Without a clear, published framework, the entire mechanism lacks a starting point.

The parallel test is the progress of the U.S.-led trading bloc. The February 4 ministerial brought together 55 foreign delegations and formally launched the Forum on Resource Geostrategic Engagement (FORGE). The stated goal is to create a preferential trade zone with coordinated price floors and tariffs. The key metric to watch is the adoption rate. Which nations will commit to the proposed reference prices and the accompanying tariff enforcement? The initial bilateral and trilateral agreements announced at the summit are a start, but building a broad, functional bloc requires sustained diplomatic effort and tangible incentives, like the promised private financing and emergency supply guarantees.

The program faces three major risks that could derail it. First is China's potential retaliation. Beijing is likely to view this initiative as a direct challenge to its market influence and could respond with its own trade measures or by further consolidating its control over key supply chains. Second is the economic viability of U.S. and allied production. The AI benchmark aims to support investment, but the high costs of building new mines and processing facilities in the West must be justified against these new price targets. If the reference prices are set too high relative to the real costs of Western production, they could become uncompetitive. Third is gaining trust from partners. The OECD has flagged the initiative as an AI hazard, questioning its ability to model complex, geopolitically charged markets. For allies to join a bloc that uses an algorithm to set their trade rules, the system must demonstrate transparency and fairness. The administration's hardline approach could complicate efforts to build the trust needed for collective action.

The bottom line is that the next few months will separate promise from policy. The launch of the OPEN AI model's first reference prices and the concrete steps taken to formalize the trading bloc will be the first real tests. Success would validate the administration's attempt to use technology and diplomacy to reshape a strategic market. Failure would highlight the immense challenges of coordinating global supply chains and setting prices in a world where real-world costs and political power still dominate.