As President Trump and President Xi Jinping prepare for high-stakes talks following the breakdown of the May Geneva trade agreement, China's tightening grip on critical mineral exports—especially graphite, rare earths, and gallium—is sending waves through the renewable energy sector. These materials are the lifeblood of lithium-ion batteries, wind turbines, and solar technologies, and their restricted flow can be considered a central point in U.S./China trade tensions.
But there's another accelerant in the mix: artificial intelligence. The explosive growth of AI infrastructure—particularly data centers and high-performance computing—has triggered a parallel surge in electricity demand. This is placing unprecedented pressure on grid capacity and intensifying the urgency for clean, scalable energy solutions... and of course, the underlying raw materials.
For transactional professionals in the renewable energy space, this is more than a diplomatic standoff—it's a potentially strategic pivot point:
Supply Chain Stress Test: With China accused of "slow-rolling" its commitments and the U.S. threatening retaliatory measures, companies dependent on Chinese inputs face heightened exposure. Deal teams must now scrutinize sourcing strategies and geopolitical risk as part of core diligence.
Valuation Realignment: Domestic producers of critical minerals and battery tech are suddenly in the spotlight. Expect premium valuations and increased competition for assets that offer supply chain insulation—especially those tied to AI-driven energy demand.
Policy-Driven Momentum: The momentum once driven by the Inflation Reduction Act and DOE funding streams is now facing headwinds from the proposed "Big Beautiful Bill," which includes significant rollbacks to clean energy tax credits (TBD if it all gets past the Senate as drafted). And while the bill may slow some segments, it could accelerate M&A in domestic mineral processing and grid modernization—areas less reliant on federal tax credits and more aligned with national security and AI infrastructure needs.
Strategic Optionality: With tariffs potentially snapping back and export curbs tightening, acquirers must weigh not just financials, but also geopolitical agility. Targets with diversified supply chains, AI-aligned energy solutions, or strategic partnerships outside China may command a premium.
So, the Trump–Xi mineral standoff isn't just a headline—it's a live issue running through the future of clean energy and AI infrastructure. For dealmakers in energy and energy adjacent projects: geopolitics, energy resilience, and digital acceleration are now inseparable components of valuation, risk, and opportunity.
China has stopped almost all shipments of critical minerals that are needed for cars, robots, wind turbines, jet fighters and other technologies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
