Nearshore News: Rare Earth Race, Canada Talks, Packaging Shifts, and the Textile Industry’s Struggle for Attention

The U.S. is accelerating efforts to reduce reliance on China for rare earth materials — a move that highlights the complexity of building secure domestic capacity. In North America, U.S.-Canada negotiations approach a critical deadline, with tariffs at the center of the debate. Meanwhile, 50% duties on steel and aluminum are driving packaging producers to weigh costly shifts, and U.S. textile makers find themselves sidelined as policymakers focus on higher-value sectors.

Nearshore News Summary:

• The U.S. is racing to reduce its reliance on China for rare earth materials, crucial for magnets used in electronics, vehicles, and defense. (Washington Post)
• As Canada and the U.S. approach a July 21 trade deal deadline, President Trump insists on tariffs while Canada works to protect its market access. (WSJ)
• 50% tariffs on steel and aluminum tariffs are driving up costs for U.S. canned food producers and packaging-dependent industries, sparking interest in alternatives like cartons, plastic, and glass. Brands relying on recycled aluminum are less impacted, as recycled content avoids tariffs. (Reuters)
• Despite calls for greater protection from cheap imports, the fashion industry struggles to gain attention as policymakers focus on higher-value manufacturing such as steel, semiconductors, and pharmaceuticals. (NYT)

U.S. races to develop alternatives to China’s rare earth materials

Published: June 24, 2025
Source: Washington Post

The U.S. is racing to reduce its reliance on China for rare earth materials, crucial for magnets used in electronics, vehicles, and defense. USA Rare Earth (USARE) is building a plant in Stillwater, Oklahoma, aiming to produce neodymium magnets by 2026 as part of a push to create a domestic supply chain. Despite progress, the effort faces major challenges—including technical complexities, labor shortages, and China’s cost advantage—meaning full independence from Chinese rare earths will take years and require sustained government support.

Key points:

• U.S. Dependence on China: China dominates the global supply of rare earths and related magnets, using its position as leverage in trade negotiations.
• USA Rare Earth’s Plan: USARE is constructing a magnet plant in Oklahoma to produce 600 metric tons of magnets annually starting in 2026, with plans to scale up to 5,000 metric tons.
• Supply Chain and Technical Hurdles: The company will initially use raw materials from South Korea, aiming to eventually source from its own mine in Texas. The production process is highly sensitive and complex, with tight tolerances.
• Government’s Role: Federal support—including subsidies, tax credits, and faster permitting—is seen as essential to compete with China’s state-backed industry.
• Geopolitical Stakes: China’s recent rare earth export restrictions disrupted U.S. manufacturing (e.g., a Ford plant shutdown), intensifying pressure to build a secure domestic supply chain.

Trump Set on Tariff Demands as Canada Negotiations Head Toward Deadline, Canadian Ambassador Says

Published: June 24, 2025
Source: WSJ

As Canada and the U.S. race toward a July 21 trade deal deadline, Canada’s ambassador to the U.S., Kirsten Hillman, says President Trump remains determined to include tariffs in any agreement. Canada is working to protect its market access while trying to convince Trump that open trade benefits the U.S. Hillman envisions a two-stage negotiation process: resolving immediate tariff issues now, and addressing broader matters like digital taxes and dairy quotas during next year’s USMCA talks.

Key points:

• Trump’s Tariff Focus: President Trump views tariffs as central to his economic agenda, making them a key part of ongoing trade negotiations with Canada.
• Canada’s Short-Term Goals: Canada is pushing to reduce or eliminate U.S. tariffs on steel, aluminum, autos, and goods penalized over fentanyl concerns.
• Two-Stage Negotiation Plan: Hillman sees an initial deal addressing urgent tariff concerns, with longer-term issues like digital taxes and dairy quotas handled during USMCA renegotiations in 2026.
• Canada’s Strategy: Canada is emphasizing shared economic and security ties to persuade the U.S. that maintaining open trade supports Trump’s goals for energy security and investment.
• Deadline and Talks Progress: The countries set a July 21 deadline; negotiators have already held multiple meetings and are deepening discussions on each side’s demands.

From cans to cartons: how Trump's metals duties affect packages on shelves

Published: June 24, 2025
Source: Reuters

President Trump’s doubling of steel and aluminum tariffs to 50% is driving up costs for U.S. canned food producers and packaging-dependent industries, sparking interest in alternatives like cartons, plastic, and glass. However, switching packaging formats comes with cost, logistical, and operational challenges, and most companies are cautious about major changes given the uncertainty of trade policies. Meanwhile, beverage makers relying on recycled aluminum are less impacted, as recycled content avoids tariffs.

Key points:

• Tariffs Increase Packaging Costs: U.S. producers of canned foods, beverages, and personal care products are facing higher costs due to the new 50% tariffs on steel and aluminum used in packaging.
• Shift Toward Alternative Packaging: Some companies, like Pacific Coast Producers and Coca-Cola, are exploring alternatives such as aseptic cartons, foil pouches, plastic, or glass to offset rising metal costs.
• Logistical and Cost Challenges: Alternatives like glass are heavier and costlier to transport, and switching formats requires substantial investment and operational changes that many companies are reluctant to undertake quickly.
• Recycled Aluminum Eases Impact: Beverage makers using cans with high recycled content (e.g., 71% on average) are less affected by tariffs, as recycled aluminum is exempt from the duties.
• Industry Caution Amid Policy Uncertainty: Companies are hesitant to overhaul packaging strategies until it’s clearer how long the tariffs will last and whether trade policies will shift again.

U.S. Textile Makers, Feeling Forgotten by Trump, Hope Boom Days Are Ahead

Published: June 25, 2025
Source: NYT

U.S. textile manufacturers, once vital during the pandemic for producing protective equipment, now feel overlooked by the Trump administration’s industrial policy, which prioritizes sectors like steel, semiconductors, and pharmaceuticals. Despite technological innovations and calls for greater protection from cheap imports, the industry struggles to gain attention as policymakers focus on higher-value manufacturing. 

Key points:

• Textiles Overlooked in Industrial Policy: Trump’s trade agenda focuses on industries like steel, chips, and pharmaceuticals, leaving textile manufacturers frustrated despite their pandemic contributions.
• Backlash to Administration Comments: Treasury Secretary Scott Bessent’s remark that a booming U.S. textile industry isn’t necessary drew sharp criticism from textile producers and lawmakers, particularly in South Carolina.
• Industry Shrinkage and Challenges: U.S. textile jobs have fallen from 1.5 million in the 1990s to about 470,000 today, largely due to globalization, trade liberalization, and automation.
• Tariffs Help, But Not Enough: While manufacturers appreciate tariffs that protect against Chinese imports, they argue more targeted measures are needed to sustain and grow the domestic textile supply chain.
• Cost and Labor Realities Remain Barriers: Both policymakers and industry leaders acknowledge that reshoring apparel manufacturing is difficult given cheaper labor abroad, and without major technological breakthroughs, large-scale return of these jobs is unlikely.