Officials from Japan, France and Canada are working on policy options to reduce reliance on China for rare earths and other critical minerals, pursuing pathways distinct from a U.S.-led proposal to create a preferential trade bloc, according to senior officials from those countries.
Among the measures under consideration are import quota regimes for certain rare earth elements, subsidies to support mining projects and processing in regions such as the Western Hemisphere, and a buyers' club concept championed by Canada that aims to create a reliable supply chain outside China and challenge Beijing's near-monopoly on these metals.
In February, the U.S. Vice President JD Vance announced plans to coordinate allies into a preferential trade arrangement for critical minerals. Yet, within weeks of that announcement, some countries are advancing alternative arrangements - a development officials cited as an illustration of Canadian Prime Minister Mark Carney's call for middle powers to cooperate as the U.S. approach has strained relationships with some allies under President Donald Trump. The White House did not respond to a request for comment.
Hiroyuki Hatada, Director of the Americas Division at Japan's Ministry of Economy, Trade and Industry, said on the sidelines of a mining conference in Toronto that one concrete way to diversify rare earth supply chains is to subsidize projects in the Western Hemisphere so they can compete commercially with Chinese production.
Rare earths are difficult-to-extract metals used in technologies ranging from cell phones and electric vehicles to high-tech weapons. China currently controls over 90% of these metals and imposed export controls last year in response to U.S. tariffs, a move that has reinforced Western concerns about supply concentration.
Japan has encouraged its manufacturing sector to enter commercial agreements with rare earth projects that Tokyo has helped fund alongside allies including France, Australia and Canada. Hatada noted that such projects "might not be the cheapest, but now that the industry understands the balance of risk and price, it is not a bad idea to use those projects." That language underscores a willingness to accept higher upfront costs for greater supply security.
Benjamin Gallezot, France's interministerial delegate for supplies of strategic minerals and metals, characterized the U.S. proposal as one viable approach among several. "The U.S. proposal is one way to diversify, but there are other ways to do it," he said. Gallezot added that France does not foresee a single, universal policy and that any framework should be negotiated among a broad set of countries - "not only the G7, but G7 plus," he said.
France has floated concrete policy levers including a quota system that would limit the amount of certain metals companies can import and requirements for firms in targeted sectors to diversify their sourcing. Gallezot also said France supports Canada's buyers' alliance concept and intends to advance the idea as it assumes the G7 chair later this year.
Over the past two years, G7 members have proposed multiple measures designed to address China's dominance in rare earths. Western policymakers have signaled concern that critical industries - including defense-related manufacturing - have become overly dependent on relatively inexpensive Chinese sources.
Canada has pursued a combination of diplomatic and commercial initiatives to build alternative supply. Ottawa has signed 30 new agreements with 12 countries for a proposed C$12.6 billion - equivalent to $9.22 billion - of investments in mining and mining technology, bringing the total since October to around C$18 billion. In a related development, Australia said on March 4 that it would join Canada's G7 critical minerals production alliance.
"Canada believes that the best way to address the issue of concentrated supply of critical minerals is through a production alliance or a buyers' club," Energy and Mining Minister Tim Hodgson said. The Canadian proposal envisions a buyers' club that would coordinate demand and investments among allied countries to foster secure, diversified production outside of China.
Officials from Japan, France and Canada emphasized that efforts to develop non-Chinese sources can combine commercial arrangements, public support and multilateral cooperation. They framed these options as complementary rather than mutually exclusive, reflecting a broader strategy that balances cost considerations with the strategic imperative of supply security.
Implications - The debates underway among G7 members and partners highlight trade-offs policymakers face between lower-cost supplies and the geopolitical need to reduce dependence on a single dominant producer. Measures such as subsidies and quota systems aim to shift economics in favor of diversified production, while a buyers' club model seeks to coordinate demand and investment across like-minded countries.