Trump and the EU’s Critical Raw Materials Dilemma: A New Era of Supply Chain Vulnerability
This is the third and conclusive installment of the Topic of the Month: Trump’s effect on EU value chains
The global scramble for critical raw materials (CRM) is intensifying as the small handful of players who dominate their extraction and processing look set to use these resources as both an economic tool and a geopolitical weapon. With Donald Trump’s return to the White House, the EU’s vulnerabilities in securing these materials may deepen, especially given the shifting US approach to Ukraine and the High North’s vast resource wealth. Disruption in the value chain of CRMs could have serious implications for Europe’s green transition.
Critical raw materials are the foundation of Europe’s clean energy ambitions. Clean technologies like wind turbines, batteries, and electrolyzers for hydrogen production all depend on a stable supply of materials such as lithium, cobalt, and rare earth elements.
However, as highlighted in a recent academic paper on hydrogen targets and supply chain dynamics, the EU’s access to these materials is anything but secure. In this short article I describe how recent developments in US foreign policy could threaten EU CRM supply chains and outline some of the steps already being taken to mitigate these risks.
Key Players and Recent Geopolitical Developments
China remains the dominant player in CRM refining and processing, controlling an overwhelming share of the supply chain. This concentration of power creates an inherent vulnerability for Europe, as any disruption—whether due to geopolitical tensions, trade restrictions, or economic policies—can have cascading effects on Europe’s clean energy agenda.
The securitization of CRMs is reshaping global power dynamics. Access to and control over CRM supply chains gives strategic leverage over import-dependent countries in a similar way to how control of fossil fuel supplies has been in recent history. China has long recognized this and has been working for decades to build up control over extraction and processing as a bargaining chip in trade negotiations. The U.S., under a new Trump presidency, may adopt a similar stance.
Trump’s previous interest in acquiring Greenland for its resource wealth signals a broader shift: securing supply chains through direct economic and political control. Washington has made clear that the continuation of its military support to Ukraine is conditional on US companies gaining control of much of Ukraine’s mineral wealth. This could have profound consequences for the EU – with Ukraine holding 22 of the 50 materials considered ‘critical’ by the EU. A more transactional US foreign policy could mean prioritizing US industry over European needs, further exposing the EU to supply chain risks.
The EU’s Response: Critical Raw Materials Act and Beyond
Recognizing these risks, the EU has been moving toward greater supply chain resilience. This began with the Raw Materials Initiative in 2008 and culminated in the Critical Raw Materials Act (CRMA) of 2024. The latter aims to diversify CRM sourcing, boost domestic mining and refining, and increase recycling efforts. However, these measures may not be enough to counteract the power dynamics at play.
The EU’s approach to securing critical raw materials is built on a comprehensive diversification strategy that takes multiple forms. First, there is input diversification setting targets to extract at least 10% of the EU’s needs through domestic mining and process 40% within the EU. This is complemented by trade diversification, which aims to limit reliance on any single external supplier to no more than 65% of total imports, reducing the risks associated with overdependence on dominant producers. Alongside these efforts, the EU is also advancing recycling as a key pillar of supply security, with the CRMA establishing a 15% target for recovering critical raw materials from end-of-life products, reinforcing a circular economy approach.
Beyond diversification, strategic stockpiling is gaining attention as a tool to mitigate supply shocks, though implementation remains complex and uncertain, given the financial and logistical challenges involved. At the same time, international partnerships are essential to securing stable supply chains, with the EU expanding cooperation with resource-rich countries, such as Canada and Australia. However, these agreements require long-term engagement and infrastructure development before their full benefits can be realized.
To further strengthen supply security and enhance its strategic autonomy, the EU is also considering the creation of a Critical Raw Material Centre under the Clean Industrial Deal. This initiative would centralize market intelligence, coordinate joint purchasing, and enhance strategic planning, ensuring better pricing and reducing dependency on dominant suppliers.
Parallel to this, the Net-Zero Industry Act (NZIA) singles out 19 tried-and-tested Net-Zero Technologies whose manufacturing should be supported by the EU, similar to the CRMA identifying critical and strategic raw materials. This is a first response to the 2022 US Inflation Reduction Act (IRA), in an effort to boost the EU’s domestic clean tech manufacturing sector by preserving a competitive edge where it is comparatively stronger (such as wind) or regaining competitiveness in areas where it has lost its edge (such as solar PV).
A More Strategic and Resilient Europe
It is clear that access to critical raw materials and the ability to produce metals domestically have now become strategic defence and security priorities. Securing critical raw materials is no longer just about decarbonization and competitiveness. It is now essential for economic resilience, industrial sovereignty and geopolitical autonomy. To navigate this shifting landscape, the EU is looking into a mix of complementary approaches.
Diversification, which takes several forms in input and trade, is the cornerstone of the EU’s strategy to address the critical raw material dilemma. Beyond diversification, strategic stockpiling is being explored to buffer against disruptions while strengthening partnerships with resource-rich and like-minded countries remains essential to reinforcing its own supply chain resilience. However, these efforts alone will not be enough. Greater focus on recycling, which is currently leaking value, is needed, and while recycling and diversification are important, R&D and substitution strategies should also be prioritized. These are critical to enabling the development of alternatives to scarce and politically entangled materials, whether through new technologies for battery production or alternative catalysts for hydrogen electrolyzers.
Yet these internal strategies must be seen in the broader geopolitical context. With the return of Donald Trump to the White House, the US appears poised to adopt a more transactional, America-first approach to resource diplomacy. A competitive change that might jeopardize the EU’s CRM access is indicated by the US’s increasing interest in acquiring High North resources through political leverage and its changing stance on Ukraine, which now conditions support for US access to mineral assets.
In this evolving landscape of strategic resource competition, the EU needs to undertake measures to assert its autonomy, reduce critical dependencies, and strengthen the political governance of its value chains. Developing a more robust CRM strategy is no longer just about preparing for market disruptions, it involves positioning the EU in a world where resources equate to influence. Ultimately, it is a delicate balancing act between domestic capacity, international cooperation, innovative resource recovery strategies, advanced technology breakthroughs and lowering supply risks through deeper integration of critical raw material value chains.
