'It’s a mistake': WSJ editors blast Trump admin's scheme to emulate China

The conservative Wall Street Journal editorial board on Monday slammed the Trump administration's attempts to semi-nationalize efforts to extract rare earth minerals to compete with China.

"What would Republicans have said if the Biden crowd acquired government stakes in companies with ties to its friends and family? Well, that’s more or less what the Trump team is doing to little political objection. State capitalism and political cronyism are in fashion these days, despite a history of failure," wrote the board, which has increasingly become vocal against Trump's economic agenda. "The Commerce Department recently announced a $1.3 billion loan and $277 million in direct funding for USA Rare Earth, in return for an equity stake and warrants that are worth about 10% of the company. USA Rare Earth is developing a Texas mine that contains 15 of the 17 rare-earth elements and a magnet manufacturing plant in Oklahoma."

Developing a domestic supply for rare earth elements is important, the board wrote, since they are needed in everything from electronics to weapons to medical imaging — but the way the administration is going about it is fraught with risk of corruption.

Moreover, they pointed out, the U.S. is unlikely to truly beat China in this field because "lax environmental rules let Chinese companies produce rare earths cheaply. Beijing doesn’t have to worry if hazardous byproducts pollute rivers. The Communist Party has also helped its homegrown companies acquire mines in developing countries. Western producers have struggled to compete, and many have been driven out of the market."

And to cap it all, the administration is also taking stakes in some of the same mineral firms that Donald Trump Jr.'s 1789 Capital fund is investing in, like Vulcan Elements — which throws into question the real purpose of these deals.

"A better idea to counter China’s rare-earth dominance is to coordinate development of mines and processing facilities with allies, as the White House has sought to do with Australia. The Administration could also guarantee government purchases of rare earths and fast-track permitting, as Mr. Trump’s Operation Warp Speed did for Covid vaccines," the board concluded. "It’s a mistake to think that the only way to beat China is to emulate its statist model."