Amidst rising geopolitical tensions and a shared concern over China's dominance in critical mineral supply chains, the United States has signaled the potential for a trade deal with India, even as the Quad nations – the US, Australia, India, and Japan – have launched a new Critical Minerals Initiative. This initiative aims to bolster economic security and collective resilience by diversifying and securing the supply chains for critical minerals essential to clean energy and defense sectors.
The Quad Critical Minerals Initiative, unveiled after a foreign ministers' meeting in Washington on July 1st, 2025, seeks to address the vulnerabilities arising from reliance on a single country for processing and refining critical minerals. The initiative will focus on joint investments, shared processing capacity, data sharing, and coordination on export controls. This echoes the EU-US Minerals Security Partnership but with stronger security considerations. The move is a direct response to China's growing influence and weaponization of its mineral dominance, particularly after China announced export restrictions on rare earths earlier this year. China currently controls over 80% of global rare earth refining and 70-80% of key battery inputs like graphite and manganese sulphate.
U.S. Secretary of State Marco Rubio emphasized the importance of diversifying supply chains to ensure access to raw materials and the ability to process and refine them into usable material. He highlighted that a diverse and reliable global supply chain is critical for all technologies and industries. The initiative will target co-investment in "high-integrity" projects and environmental standards across Indo-Pacific producers, with a particular focus on Australia and India. Japan is expected to provide financing, while the U.S. will offer political and commercial backing through the DFC and EXIM Bank.
However, tensions have surfaced on the sidelines, with Indian and Japanese officials expressing concerns about recent U.S. protectionist measures, including potential tariffs on key imports. Frictions are emerging around the definition of "friendshoring" and whether the U.S. views its partners as equals or subcontractors.
Meanwhile, the White House has indicated that a trade deal with India could be announced "very soon". Negotiations are ongoing, with a critical July 9th deadline to avert a 26% tariff on Indian goods looming. India is reportedly holding firm on agricultural concessions, while both nations aim for a broader trade agreement by the fall of 2025, with an ambitious target of increasing bilateral trade from $191 billion to $500 billion by 2030.
Despite these challenges, both sides are striving for a comprehensive bilateral trade agreement, with ongoing negotiations in Washington. India seeks relief in labor-intensive sectors such as textiles, garments, leather goods, and chemicals, while the U.S. seeks market access for apples, tree nuts, genetically modified crops, dairy, and electric vehicles.
President Trump stated that the potential deal would involve "much lower tariffs," enabling fairer competition between the two countries and facilitating American companies' access to the South Asian market. He expressed optimism that India is ready to lower trade barriers, potentially paving the way for an agreement and averting the announced tariffs.
The convergence of the Quad's Critical Minerals Initiative and the potential for a U.S.-India trade deal underscores the evolving dynamics of international relations, trade, and security in the face of China's growing influence. While challenges and disagreements remain, the commitment to strengthening economic security and diversifying supply chains signals a significant shift towards greater collaboration and resilience among these key Indo-Pacific partners.
