Catherine Cortez Masto Asks Expert About Using 'Targeted' Tariffs On China To Bolster US' Critical Mineral Supply

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During a Senate Finance Committee hearing Wednesday, Sen. Catherine Cortez Masto (D-NV) spoke about using 'targeted and strategic' tariffs on China's critical mineral industry.

Transcript

00:00easier. Thank you, Mr. Chair. Thank you. Senator Cortez Mastel. Thank you, Mr. Chairman. Thank

00:05you for this hearing as well. I appreciate all of the panelists today and the conversation.

00:10Dr. Baskarin, pronounce your name for me. Is it Baskarin? Baskarin. Baskarin. Thank you very much.

00:16Let me ask you this, and I'm sure you've talked a little bit about this, and I understand

00:21Senator Corrin addressed this a little with you with rare earth minerals, but we know China

00:27controls 90 percent of the world's manufacturing of rare earth minerals into magnets, which

00:33we know are critical to U.S. national defense and the economy. I have a bipartisan bill that

00:39would help build the U.S. supply chain for these minerals by creating a tax credit for companies

00:45domestically manufacturing the magnets necessary to power American technology. My question to

00:53you is do you think there is a role for tax credits like these to incentivize greater production

00:58of mined and processed critical minerals in the United States? Production tax credits will

01:04be very important, Senator. The reason is this, is China actually flooded the market with rare

01:09earths between 2010 and about 2018, and it actually forced prices for rare earths down to a point

01:16that made it very difficult for non-Chinese entities to compete in this space. Remember, America was

01:21once the top rare earths producer in the world between the 1950s, 60s, 70s, and 80s. So what we

01:27need is we need an incentive to get companies to make these long-term investments in a time when

01:32prices are really low. The difficulty is we are being out-competed by the Chinese. So any way that

01:37we can reduce the cost of doing business for these companies is really going to be critical to what

01:42Mr. Ragland said is leveling the playing field. We have the same dilemma in mining. Do you think there are

01:47trade policies that complement domestic production tax credits? Is there something else we should be

01:52thinking about with respect to trade policies? I think using tax, using some sort of trade incentive

01:57to source minerals from abroad, and this includes rare earths. Remember that in the United States we

02:02are building our processing capabilities and our permanent magnet manufacturing. The difficulty is

02:07at the end of the day we still have 1.3 percent of the world's reserves. We should be tapping into

02:13reserves. When we add up Brazil and Vietnam, it's actually greater than China in absolute reserves.

02:18But we're not really leveraging these to bring those rare earths back home to separate and

02:24manufacture here. That's what U.S. leadership is to me. It's sourcing from abroad to bring that home.

02:29So how do we create the tax incentive, the investment incentive in those markets to bring it home is

02:34going to be really key. As well. Yeah, I agree. Thank you very much. Let me also ask you, in Nevada,

02:41listen, I'm very proud. Nevada has the most mineral wealth of any state in the country, and we produced

02:46almost 10 billion worth of mineral commodities in 2024, which by the way supports about 83,000 jobs in my state.

02:54But as we were talking, this is threatened by Chinese, right? By Chinese firms that don't play by the rules by

03:01overproducing underpricing critical minerals to undercut our companies. Let me ask you this. Do you

03:06believe that targeted and strategic tariffs, unlike the chaotic blanket tariffs that we see here imposed

03:13by this administration, can play an important role? And as we are thinking about the targeted tariffs,

03:19please talk about if that works, has it worked in the past, and what we should be thinking about in

03:26the future if we're looking at targeted tariffs? Targeted tariffs are going to be really important.

03:31So for example, we shouldn't be tariffing raw ore, right? Where we want to bring raw ore back home to

03:36the U.S. to process, putting a tariff on it makes it uncompetitive. I'll use copper as an example. 95% of the

03:43value of copper is generated when I take it out of the ground. The profit margins on refining are so small

03:48that if I make that ore 25% more expensive, it is unviable. There is not a company that will build

03:54a copper smelter here in the United States. So thinking more strategically to ensure that, A,

03:59we are not putting tariffs on raw ore will be super important. Second, are we using tariff policy in a

04:04way that is not punitive to countries that we want to source from that may be new markets for minerals

04:10where we want our Western companies to go into? We don't want to put tariffs on those. Now, whether we use

04:16tariffs on finished products from China is a totally different question. It goes back to the Ronald

04:21Reagan quote, right? If we want more of something, subsidize it. If we want less of it, tariff. If

04:25we want less finished products from China, we should, you know, shift our tariff policy that way. But

04:31in agreement that putting tariffs across the board actually disincentivizes the development of a

04:35domestic refining industry. So let me add to this because I agree with you there. And I've been a

04:41proponent of AGOA, which is the African Growth and Opportunity Act. And it's a key element of our

04:47relationship with sub-Saharan Africa. But it creates valuable opportunities for U.S. workers,

04:53for businesses and consumers. And it's set to expire in September. AGOA Renewable provides a key

05:00strategic opportunity to diversify global supply chains. And again, reduce our reliance on China.

05:08Do you believe that AGOA Renewable provides an opportunity to advance U.S. critical mineral

05:15interests? And if you do, what should we be thinking about in Congress as we look to renew it?

05:21And I hope we do. AGOA is one of the most bipartisan pieces of legislation. And it has

05:26been our absolute linchpin of commercial diplomacy with the African continent. Not renewing it would be

05:31a very negative signal to a continent that benefits enormously from it. Now, is AGOA in and of itself

05:37going to solve our critical minerals in its current form? Probably not. And part of that is because

05:41tariffs on minerals are generally very low. When I look at tariff rates with some African countries

05:46on minerals, they're like two, two and a half percent. They're not going to be significantly

05:50more competitive because of AGOA. What would make AGOA more beneficial is potentially linking an

05:55investment incentive to it. It's kind of what the 30D did under IRA, right? I created an incentive to

06:01source minerals from these countries. Pairing AGOA with an investment incentive is not only a strong

06:07commercial diplomacy signal, it's a strong minerals diplomacy signal. So I'd like to think a little

06:11bit about AGOA 2.0 in that way to think about how do we make minerals feature more prominently

06:16to make sure it's bilaterally beneficial. Thank you. Thank you, Mr. Chairman.

06:19I think my colleague, Senator Whitehouse is next.

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