The Peter Zeihan Podcast Series - America’s Processing Crisis: Racing China's Decline || Peter Zeihan

Episode Date: May 30, 2025

One of the biggest challenges to US reindustrialization isn't the raw materials, it's the lack of processing infrastructure to convert those raw materials into intermediate products. Let's break it down.Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://mailchi.mp/zeihan/americas-processing-crisis-racing-chinas-decline

Hey all, Peter Zine here coming to you from Dead Horse Point State Park. Weird name. Looking over here at the Colorado Basin, that is a potash facility, which means it's time to talk about processing. One of the biggest problems the United States faces in its re-industrialization effort isn't necessarily mining the minerals. It's turning them into something useful, putting them into an intermediate form that can then be used in manufacturing. One of the things the Donald Trump administration has done by enacting tariffs on everybody is making more difficult for us to get the intermediate and finished materials that we need in order to do the industrialization process. What should have been done first, and this is not simply a criticism of the Trump administration, but also the Biden administration, the Trump administration before that,

the Obama administration before that, and on and on, is that North America is very rich in any number of raw materials, but we need things like this in order to separate the ore in order to get at the minerals that we are after, and then you turn them into an intermediate. product like, say, semi-finished aluminum or copper or whatever it happens to be. We basically need to increase processing on the continent by roughly a factor of 20. It's different based on whatever mineral you're talking about. But the problem we have is that the Chinese have basically massively subsidized their processing industry. So China is not nearly as rich in the raw materials as we are here in North America or the Western Hemisphere.

We're at large, but they've expanded their money supply. They've funneled everybody's private capital into whatever projects generally employment. And so if there's something that technically that they can achieve, even if they're not the low-cost producer, they subsidize the crap out of it in order to the corner the market in whatever it happens to be. And then, because no one can compete with these subsidized prices, they basically drive other processors around the world out of business. And that's before you consider that environmental regulations in China are significantly less intense than they are in any third world country, much less first world country. So cheap capital, turning a blind eye towards environmental. damage, they've tended to corner the market. Well, we only now have a few years to undo and rebuild some of our mistakes in order to have these materials locally. And unfortunately, it's very difficult

to consider being a manufacturing power, much less an industrial power, without having these things in place first. So we are now set up to have kind of the worst of all worlds. The Chinese system is breaking. It's going away. We're losing access to everything that they've been subsidizing for us these last 30 years, and we have yet to build enough of that capacity at home to begin a serious re-industrialization program, much less provide enough manufactured goods for our own population. So expect to see a lot more things like this in the future all over the continent, because without them, we don't have anything to work from.