(Not So) Fun Fact: According to Brown University, the conflict in Iran has cost U.S. consumers nearly $60 billion in additional gasoline and diesel costs due to higher prices stemming from the Strait of Hormuz closure.

The G7 Summit: Iran and Critical Minerals

What’s Happening: This week, the Group of Seven (G7) – the world’s largest democratic economies – held a summit in France to discuss current shared geopolitical and economic concerns. The top issues included the proposed U.S.-Iran deal the president signed last night, amid speculation regarding a possible formal ceremony to come. While details of the final deal and its implementation remain a moving target, the current memorandum provides for a 60-day ceasefire and reopening of the Strait of Hormuz while both sides negotiate a more permanent end to the conflict. The memorandum also allows Iran to promptly sell oil again and provides $300 billion for Iran’s reconstruction; U.S. economic sanctions are expected to be eased. It is unclear what concessions Iran may give, however, President Trump has stated that the United States will not be contributing to any physical reconstruction efforts. Setting aside peace deal discussions, the G7 also covered areas of economic cooperation. The G7 has announced an ambitious new goal to reduce its reliance on Chinese critical minerals by agreeing that no single country should supply more than 60 percent of the G7’s overall rare earth imports by 2030. This announcement builds on last year’s “Critical Minerals Action Plan,” which recognized the economic and strategic importance of these minerals.

Why It Matters: Although the U.S.-Iran deal and G7 summit are not reliant on one another, all of the G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) have faced economic headwinds as a result of the Strait of Hormuz closure. Both the World Bank and International Monetary Fund have lowered global growth estimates – primarily due to high energy prices – with each of the G7 nations being negatively impacted by lower growth and greater inflationary pressures (See Figure 1). If a durable ceasefire is established, the Strait of Hormuz could slowly return to regular flows of energy, fertilizer, and other key products which will settle global markets. Nevertheless, it will take weeks to months for traffic to return to pre-conflict levels and many more months for damaged infrastructure to be repaired so oil and gas can again be produced. The 60-day ceasefire may not provide enough time for the global tanker fleet to readjust – particularly if shipping companies continue to anticipate dangerous conditions or a resumption of fighting after just two months. It may be more viable for some shippers to maintain their newly established alternative routes until a formal agreement is reached, delaying a global economic recovery.

The G7 announcement to reduce the concentration of critical mineral imports from a single country is just the latest in a long line of steps taken by the United States and its allies to create an alternative supply to China. China currently mines roughly 70 percent of all rare earths and holds 90 percent of the processing capacity for critical minerals used in everything from semiconductors to vital defense technologies. The Trump Administration witnessed this vulnerability firsthand when China imposed export controls on key minerals during the trade war last year. Since then, the administration has taken equity stakes in mining companies, signed multiple deals with countries to collaborate on extraction, processing, and refinement, and created “Project Vault” to secure a critical minerals stockpile. It will take many, many years for G7 countries to cultivate domestic capacity as Figure 2 clearly shows a production shortfall for many minerals. This entire initiative could be streamlined by reducing trade barriers and easing regulatory burdens. If the G7 goal is to reduce reliance on countries that can wield critical mineral dominance as a weapon, it is counterintuitive to have high tariffs or restrictions on the tools, technology, and materials that make “mineral independence” possible. In order to achieve greater results, the Trump Administration should look at expanding the critical minerals market to encompass aligned, democratic nations rather than solely focusing on domestic capacity. Finally, it is worth noting that it can take 7–10 years to get federal permits needed to open a U.S. mine, with some studies showing it can take nearly 30 years from discovery to production. If the G7 is looking to fast-track mineral independence, then permitting and regulatory reform are necessary to go full speed ahead.

Looking Ahead: All eyes are on the results of the U.S.-Iran deal and whether it will provide much needed clarity for global markets. Real-world economic implications will begin to take place only when the traffic in the Strait trends toward pre-conflict levels, meaning the faster that can happen, the better for the global economy. As for the new push by the United States and other G7 countries for greater mineral independence, expect to see more announcements of funding, tariff walls, and potential price-floor mechanisms in the future.

In Other News

The European Union Trade Deal: On Tuesday, the European Parliament approved the trade deal with the United States, with 440 votes in favor and 151 votes against. This puts the long-awaited trade deal one step closer to its final approval by European Union (EU) member states, which is expected to come shortly before President Trump’s July 4 deadline. It will be important to continue to monitor the U.S.-EU trade deal in the coming months as the Trump Administration proposes and imposes new Section 301 tariffs that may jeopardize U.S. tariff-cap commitments.

Figure 1: IMF 2026 Real GDP Growth Revisions by Country (January vs April Projections)

Source: International Monetary Fund

Figure 2: G7 Critical Mineral Production as a Percentage of Global Production (2025)

Source: United States Geological Survey Critical Minerals Atlas