Mitigating supply risk of critical and strategic materials: The role of trade policies

Abstract

Critical materials are minerals with potential supply chain risks that cannot be easily substituted in many of their applications, including, but not limited to, clean energy technologies, LEDs, smartphones, lasers, and microwave circuits. With increasing demand for these products, supply chain disruptions pose an ever-growing risk to the economic wellbeing of many nations, including the United States. One under-examined potential source of risk arises from sociopolitical instabilities and direct or indirect market manipulations, referred to generally as trade risks. To illustrate the potential challenges posed by some of these trade risks, US tariff policies for nine critical materials were examined for potential to inform future material-related trade policies. Two of these case study materials, gallium and tantalum, were examined in depth to estimate relevant economic impacts. Findings from these case studies suggest that a reduction or abolishment of tariffs in general may foster trade, economic growth, and a lowering of supply risk. Further work will be required to cement a cause and effect link between trade barriers and criticality risk.