Team,
Check out my interview with Larry Kudlow on Fox Business discussing my Wall Street Journal piece about breaking China’s chokehold on critical minerals.
You can read my WSJ piece HERE.
China’s model, which it has used across many industries—including steel, solar, rare earths, and critical minerals—is to dump into markets at predatory, below-market prices, drive competitors out of business, and then take over. For China, it’s not just about making more money. It’s about gaining geopolitical leverage.
Larry served as Director of the National Economic Council during the first Trump Administration, and as I note during the interview, we have both long been concerned about U.S. over-reliance on strategic supply chains globally.
But Xi Jinping has made my job infinitely easier at the White House. Xi has shown everyone that China is an adversary.
In my book Taking Back Trump’s America, I write about Xi unmasking himself during a meeting at the 2019 G20 summit in Osaka:
The Boss [President Trump], in a quite accidental and offhand remark, claimed—with absolute historical accuracy—that if the United States had not come to China’s aid during World War II, China would have been lost to Japan.
With that remark, Xi’s flash of anger was so bright I thought I needed shades. Gone in a Beijing second was the façade of any obsequiousness. Vaporized was any hint of a kowtow. In this magic moment of the great reveal, Xi Jinping seemed to at least figuratively rise up on his Devil’s haunches and went off on a long rant about how the noble Communist Chinese troops sacrificed blood and treasure to drive out the evil Nipponese.
Of course, Xi Jinping left out the fact that it was the nationalist Kuomintang troops of Generalissimo Chiang Kai-shek who mostly got slaughtered trying to drive out the Sons of Nippon while Xi Jinping’s progenitors—Mao Zedong and his Long March band of Communists—hid out like cowards in the mountains.
Truth be told here—but never in any of Communist China’s history books—it would be the bleeding out of Chiang Kai-shek’s forces by the Japanese during World War II that would enable Mao and his Communist troops to quickly overcome Chiang’s severely depleted nationalist forces after the war. By 1949, the insurgent and decidedly cave-rested Mao Zedong would drive Chiang and his loyalists offshore to Taiwan.
Of course, we heard none of that during Winnie the Pooh’s angry rant. Instead, we saw the total unmasking of Xi through his own harsh propagandistic rhetoric.
As I watched this unfold, I had to restrain myself from laughing out loud—that certainly would have been an international incident. But at least I had a big “I told you so” grin on my face for all in the room to see.
Immediately after the meeting, there was an absolutely priceless moment…[President Trump] acknowledged that he had finally seen the real Communist Butcher of Beijing. Said the Boss as his eyebrows rose, “Wow, did you see that? Finally, the true Xi Jinping.” True that.
Now, in the face of continuing Chinese aggression and lies, we’re using technological innovation, partnering small companies with large enablers to produce critical minerals at prices below China’s predatory prices.
We’re doing that with a paradigm shift, essentially doing for critical minerals what the frackers did for oil and positioning the U.S. for strategic critical-mineral dominance, similar to how we’ve achieved strategic energy dominance.
I look forward to your comments. Please share this far and wide.
Peter
TRANSCRIPT
LARRY KUDLOW: All right, so how can America break China’s chokehold on critical minerals? Joining us now, my great friend, Peter Navarro, White House Senior Counselor for Trade and Manufacturing. Peter, you wrote one heck of a good piece today. And basically, at the nub of this, I mean, I want you to walk through a little bit. Strategic government support. Okay? I believe in Milton Friedman. I’m in favor of free markets and free enterprise, but sometimes you’ve got to have some strategic government support. I agree with you. This is too important.
DR. NAVARRO: Larry, the answer is the free market with a little help from Uncle Sam when the adversary—and make no mistake, China is an adversary in this context—is dumping as a matter of strategy to push everybody out. The whole model, Larry, that China has used across many, many industries—steel, solar, rare earths, critical minerals—is basically to dump into markets at below-market prices—predatory pricing—get everybody out and then take it over. And usually in that monopoly-type model, what they do, the monopolist just makes more money. Right? But with China now, it’s geopolitical leverage. And I have to thank Xi Jinping. He has made my job infinitely easier here at the White House, Larry, because you and I, going back to the first term of President Trump, have been concerned about our over-reliance on strategic supply chains globally.
So, what the Wall Street Journal piece was about, and I thank the Journal for publishing it, is basically how we’re using innovation. We’re using technological innovation, mating, essentially, small companies with large enablers to produce at what will be, in many cases, prices below the predatory price of China. And how do we do that? By a paradigm shift. And the companies I talk about, Larry, in the piece, are ReElement at one end of the magnet chain—
KUDLOW: And Vulcan.
DR. NAVARRO: And Vulcan at the other end.
KUDLOW: Right.
DR. NAVARRO: So, if you go to China and watch how they make rare earths at the beginning stages, it’s like a Dickensian nightmare. It’s an environmental, just poisonous soup. And they have no qualms about doing that. And not surprising that a lot of the West basically offshored that to China. Right? But what this ReElement can do with technology on a much smaller footprint that’s environmentally friendly is use different types of feedstocks, whether it’s from the mines or whether it’s from recycled material to create what’s called the oxides, Larry.
And then the oxides go to Vulcan, and those oxides are transformed on a customized basis into the magnets for all of the applications, whether it’s an F-35 or an iPhone or an auto, everything in between. Right? So, that’s the model.
KUDLOW: Yeah.
DR. NAVARRO: And what we’ve been able to do at the White House working with— across the agencies—Department of War, we’re working with the Department of Energy. We’re working with the Import-Export Bank. And what we’re doing is we’re getting money, and a lot of times, Larry, these are equity deals. Okay? So, the government and taxpayer will get money back for this, in a way, at warp speed pushing this whole process along. And what I did, Larry, is leverage my experience from 2020 as effectively the head of the warp speed effort during the pandemic to mobilize bureaucracies. And a lot of times it’s like herding cats, but this time around everybody’s pulling oar and we’re doing really well. Gallium is a big one. I don’t know if you know what all the use is for gallium, but this one partnership alone—tiny ReElement with tiny Vulcan with a partner in between that can get scalability—will be having enough separation capacity by the end of the third quarter of this year to serve triple the entire demand of the United States. Which means we’re essentially doing what the frackers did for oil. We are positioning ourselves for strategic critical-mineral dominance thanks to the Chinese strategy. Larry, what they’re doing is they’re lying to us, first of all, with their deals. They told us they’d give us magnets.
KUDLOW: Yep.
DR. NAVARRO: They’re not. They’re doing what’s called a ‘starve, not strangle strategy.’ You know, they blame their bureaucracy for things moving slow, but they’re ratcheting down on all the world, including the United States. So again, that makes my job easy. It’s an easy sell. Come on down. Let’s get this done. So, that’s the piece.
KUDLOW: No, no, I got it. I’m with it. Just 10 seconds, Peter. How fast can they start pulling this stuff together? How fast?
DR. NAVARRO: Well, in this case, by the third quarter of this year, Larry, we’ll have enough capacity to fulfill our germanium thing. We’ve got to get that stuff that goes into the separation capacity, and that’s like mining and recycled—
KUDLOW: All right.
Dr. NAVARRO: —but we’re moving at warp speed, Larry, and we’ll give you updates regularly, but I really appreciate you having me on today.
KUDLOW: I appreciate it. No, no, no. I wanted to do it, and I’m all for it. I think it’s great stuff. Got to do it. Got to do what you’ve got to do. We learned a lot about the China story years ago. Peter Navarro, thank you, buddy. Appreciate it.
DR. NAVARRO: All right, my brother. You take care.
