A U.S.-Australia minerals deal could be a bargaining chip in trade war with China

President Donald Trump^[1] and Australian Prime Minister Anthony Albanese^[2] signed an agreement at the White House Monday on rare earth mionerals, which could serve as a bargaining chip as the United States fights a trade war with China^[3].

The two leaders signed the agreement at the top of the meeting, which Trump told the press had “been negotiated over a period of four or five months.”

“We got it done just in time for the visit,” Trump told reporters. “And we work together very much on rare earths, critical minerals and lots of other things, and we’ve had a very good relationship. We’ve been working on that for quite a while.”

Albanese said Australia has a $8.5 billion pipeline “ready to go” for the deal.

A White House official said that under the deal, the U.S and Australian governments are planning to invest more than $3 billion together in critical mineral projects in the next six months, with recoverable resources estimated to be worth over $50 billion.

Asked if the U.S. plans to lift tariffs on Australia, Trump touted his general trade policies and eventually said, “I will say this, Australia, pays very low tariffs, very, very low tariffs. Australia pays among the lowest tariffs.”

The two leaders are also expected to discuss defense cooperation, Indo-Pacific stability and the AUKUS nuclear submarine deal^[4], Albanese’s office said Sunday.

Albanese, whose center-left government was re-elected in May^[5] for a second term, said he looked forward to a “positive and constructive” meeting with Trump.

Australia, a country of about 27 million people, hasn’t figured prominently in the second Trump administration so far. Unlike many U.S. trading partners, it has a large trade deficit with the United States, earning it the minimum tariff rate of 10%.

“I don’t think Australia is particularly high on Trump’s agenda,” said Emma Shortis, director of the Australia Institute’s International and Security Affairs Program.

But the rest of the world may be watching the meeting closely, she said, “to see how Trump treats a traditional ally.”

For Albanese, the bar for success is that the meeting “isn’t a disaster,” Shortis said, avoiding the kind of Oval Office dressing-downs Trump delivered to Ukrainian President Volodymyr Zelenskyy^[6] and South African President Cyril Ramaphosa^[7].

Resource-rich Australia has sensed an opportunity in recent U.S.-China tensions over rare earth minerals^[8], which are critical components of advanced electronics and defense technologies. China, which has a near-monopoly on their production and processing, has announced a series of export controls^[9] viewed as threatening the global supply.

“We know that American companies desperately need critical minerals, and Australia is very well placed to service that need,” Australian Treasurer Jim Chalmers told reporters in Washington on Friday.

There’s been some uneasiness in Australia that it’s taken nine months for Trump and Albanese to have an official meeting, though they met briefly last month on the sidelines of the United Nations General Assembly^[10] in New York.

But there is also uneasiness about Albanese meeting with Trump at all.

Australia, whose population closely follows U.S. politics, is among the nations most critical of Trump, with 77% of survey respondents telling the Pew Research Center^[11] in the first months of his current term that they had “no confidence” in Trump to do the right thing regarding world affairs.

A poll released by the Australia Institute^[12] in May found that more than 54% of respondents preferred a more independent foreign policy over a closer alliance with the U.S., an increase of 10 percentage points compared with the same poll two months earlier, shortly after Trump returned to office.

Though Australian support for the U.S. alliance has historically been strong, “if the United States is not seen as a democracy or a nation of laws, then the alliance with the United States will come into question,” said Brendon O’Connor, a professor of U.S. politics and U.S. foreign relations at the United States Studies Centre at the University of Sydney.

Albanese broke with the U.S. last month by formally recognizing a Palestinian state^[13]. He has praised Trump over the ceasefire he brokered^[14] in the Israel-Hamas war, but will be cautious not to be seen as too “fawning” with Trump on “issues around democracy and authoritarianism and internal dissent,” O’Connor said.

The relationship has also been tested over the future of AUKUS, a $240 billion trilateral security deal in which Australia would buy U.S. nuclear-powered submarines in 2032 and then build a new submarine class with Britain.

Australian officials have expressed confidence that the deal will move forward, even though it is currently under review by the Trump administration amid concerns that the U.S. may not be able to produce enough submarines for both itself and its ally.

Australian Defense Minister Pat Conroy said last week that Australia would “shortly” be making its second of three billion-dollar payments to help accelerate U.S. nuclear submarine production.

“I think there’s reasons to be pretty skeptical about whether those submarines will ever arrive,” O’Connor said. “And it’s not just up to Trump. I mean, six months before delivering them in the 2030s the United States can decide it doesn’t have enough submarines to sell Australia three or four.”

Some in Australia have suggested that Albanese could shore up Trump’s support for AUKUS by offering a critical minerals deal.

Shortis was skeptical, arguing that “Trump’s word on any issue like this is not particularly reliable and can change very quickly.”

“It doesn’t matter what you offer Trump,” she said. “It’s never going to be enough.”