Don’t Use Rare Earth Supply As an Excuse to Beef Up the Export Import Bank
Two days after President Trump announced Project Vault, a $12 billion critical-minerals stockpile backed by the largest loan in Export-Import Bank history, Senators Kevin Cramer and Mark Warner introduced legislation to reauthorize the bank for a decade and raise its lending cap by $70 billion, from $135 billion to $205 billion.
The pitch writes itself: critical minerals, countering China, ensuring America is never again hostage to Beijing’s chokehold on the rare earths that go into fighter jets, electric vehicles, and every smartphone on the planet.
The political logic is irresistible. The policy logic is not.
I’m a longtime student of this particular institution, and the gap between what Ex-Im promises and what it delivers is not a bug. It is the defining feature. The bank has a nine-decade record of riding to the rescue of politically connected corporations, missing its strategic targets, and stumbling through mandates while making little difference. Whether rare-earth supply chains are genuinely vulnerable is a serious question that serious people disagree about. But even if you grant the hawks every premise they’re asking for, the Export-Import Bank is the wrong tool for the job.
Senator Cramer should know this better than anyone. He led the last reauthorization in 2019 on the promise that Ex-Im would become a strategic weapon against China. Congress gave the bank seven years and a $27 billion mandate. It deployed 22 percent. Now he’s back with the same pitch, a bigger number, and no explanation for what went wrong last time.
The Bank Can’t Use What It Already Has
While the Vault project has too few details to analyze right now, let’s look at the demands made by Senators Cramer and Warner. Senator Warner, for instance, argues that “A ten-year authorization allows for greater certainty, and we know how important certainty is to investors. It gives American businesses a runway for making long-term plans without that looming threat of a lapse in authorization.” Meanwhile, there seems to be no detailed public argument from the Senators for why $205 billion specifically. They seem to want the cap increase for no other reason than that the Ex-Im Bank’s Chairman John Jovanovic wants it.
In November 2025, Jovanovic told the Financial Times that Ex-Im would invest $100 billion to secure US and allied supply chains for critical minerals, nuclear energy, and liquefied natural gas. So now they want a cap of $205 billion.
The Ex-Im Bank’s current statutory exposure cap is $135 billion. Its actual exposure in fiscal year 2024 was $34 billion. As of March 2025, it was still roughly $35 billion. That’s 25 percent of its capacity and it currently sits on $100 billion in unused headroom.
Read that again. The proposal on the table is to raise the ceiling by $70 billion for an institution that can’t figure out how to deploy the $100 billion in unused capacity that it already has.
The Bank’s advocates argue that its portfolio is so small because it was effectively crippled by a four-year lapse in a board quorum from 2015 to 2019. Give it a bigger cap, a longer authorization, and a clear mandate, and, we are told, Ex-Im will deliver $100 billion in new “investments.” There are plenty of reasons to be skeptical of that claim. First, the Bank has had seven years to “recover” from whatever harm its advocates claim that it suffered. Okay, I will ask: if companies truly need the Bank, how long does it take for them to notice what they’ve purportedly been missing? (more on that later).
More importantly, we’ve already run the experiment of giving the Bank a security mandate, and then it failed it.
In 2019, Congress gave Ex-Im exactly what its advocates asked for. Senators Cramer and Kyrsten Sinema (D-AZ) led a bipartisan push to reauthorize the Bank for seven years, up from five years — they tried to get ten years back then too — with a brand-new strategic mandate: the China and Transformational Exports Program (CTEP). This was supposed to be the Bank’s reinvention, proof that it could be more than Boeing’s piggy bank. Congress directed Ex-Im to reserve $27 billion, 20 percent of its total lending authority, to counter Chinese export financing in strategic sectors like semiconductors, AI, biotech, and renewable energy.
By 2024, after five full years, cumulative CTEP lending reached $5.9 billion, about 22 percent of what Congress envisioned. The Bank’s own Inspector General found that the program was strategically rudderless. Export-finance bankers told Global Trade Review the program was “struggling to gain scale.” The reasons for the CTEP shortfall are numerous. Yes, the Bank’s domestic-content requirements and default rate caps create friction. The few companies in CTEP’s target sectors that sought to benefit from the government perk often went to the Department of Energy instead, which offered financing with fewer strings attached. And yes, the next reauthorization might loosen these constraints. But the deeper problem is that financing was never the bottleneck to achieving the program’s stated aims. Consider one of the sectors Congress wrote into CTEP: artificial intelligence. This is an industry for which the prevailing worry today is that too much private capital is chasing too few viable projects.
The bottom line is that the Bank couldn’t “invest” $27 billion to respond to the 2019 China scare, and now the senators want us to believe that they will now “invest” $100 billion to respond to this China scare, if only it had more time and more money.
I get that Congress’s response is always to add government money on top of whatever needs, real or imaginary, it identifies. The desire to treat every problem as a funding shortage is how Washington thinks about everything, but it won’t help Ex-Im become a better agency.
Now I get why this is happening now. Ex-Im’s current authorization expires in December 2026. The Bank is an institution facing an existential deadline, and it is responding exactly the way institutional self-preservation predicts: by overpromising. Project Vault. The critical-minerals stockpile. A $205 billion lending ceiling. These are not the proposals of an agency that has soberly assessed its own capacity. They are the proposals of an agency that needs Congress to reauthorize its existence and has learned that the way to secure that reauthorization is to attach itself to whatever national security priority is dominating the headlines. In 2019, it was competing with China on exports. In 2026, it is critical minerals. The pitch changes; the playbook doesn’t. And policymakers who don’t see this pattern, or don’t care, are setting taxpayers up for yet another round of disappointment at considerably higher stakes.
The Problem with Ex-Im Isn’t the Mission. It’s the Institution.
For most of its existence, roughly two-thirds of Ex-Im’s financing flowed to a handful of large corporations. Boeing dominated the loan-guarantee program for so long the Bank earned the nickname “the Bank of Boeing.” Every few years, when the concentration becomes too obvious, the Bank reinvents itself: after Boeing became politically untenable, Ex-Im rebranded as a China fighter. Now it’s the Critical Minerals Bank. The mission keeps changing. The beneficiaries stay the same, with aircraft (meaning Boeing) still being the biggest recipient of the Bank’s services.
It is worth remembering that the Bank was a problematic institution long before it was handed a critical-minerals mandate. Its original mission, providing subsidized export financing, is difficult to justify on its own merits.
First, the economic case for export subsidies in general is extraordinarily thin. In theory, there are narrow circumstances in which they could benefit a country, but empirical research has never validated that these exceptions exist in reality. What the evidence does show is that export subsidies distort trade, entrench oligopolies, and divert capital away from more productive uses. When the government offers below-market financing for exports, it doesn’t fill a gap in the capital markets. It undercuts them. The “financing gaps” that Ex-Im claims to fill are, in most cases, accurately captured by market pricing. The Bank’s intervention doesn’t correct a failure. It overrides a signal.
The unfairness in these schemes is straightforward. When Ex-Im subsidizes Boeing’s sales to foreign airlines, it doesn’t just help Boeing. It disadvantages every unsubsidized airline , foreign and domestic, that have to finance deals at market rates. The bank’s advocates counter that other countries subsidize their exporters too, and that American firms need Ex-Im to compete on a level playing field. But matching a foreign subsidy with a domestic one doesn’t level the field. It locks both countries into a cycle of escalating distortions where the winners are large firms with the lobbying capacity to access government financing and the losers are smaller competitors and national economies on both sides.
Besides, unilateral counter-subsidies rarely induce foreign governments to change their behavior. What they reliably produce is a permanent domestic constituency for the subsidy itself, one that lobbies to maintain and expand it long after the original justification has faded. The history of U.S. sugar subsidies, steel tariffs, and now export credit financing all follow this pattern.
As Cato Institute’s Scott Lincicome has noted in a different context, the economically sound response to foreign export subsidies is not to replicate them (and hence hurt ourselves in the process) but to challenge them through the World Trade Organization’s dispute resolution process, which allows the United States to bring cases against unfair subsidies and win binding rulings. WTO disputes are adjudicated by independent arbiters, cover effects across global markets rather than just our own, and have a demonstrated track record of getting member nations, including China, to modify offending policies. Yes, the WTO system needs reform, and the United States bears some responsibility for its current dysfunction, having blocked new appointments to its Appellate Body. But the answer to a broken dispute mechanism is to fix it, not to abandon it in favor of the very counter-subsidies it was designed to prevent.
In addition, the Bank has always been the epitome of corporate welfare. Most of what it does is handout subsidies to giant manufacturers who don’t need the subsidies in the first place. How do we know that? As I mentioned, when Ex-Im lost its quorum back in 2015 and couldn’t approve deals over $10 million for nearly 4 years, roughly 85 percent of its business, advocates predicted catastrophe. American exporters would be locked out of foreign markets. Jobs would evaporate. The sky would fall. It didn’t.
As my work at Mercatus with Justin Leventhal documented, private insurers and lenders moved into the export-credit space, developing new products to serve exporters the Bank had been subsidizing. We provided concrete evidence that Ex-Im had been crowding out private alternatives all along, not filling a void. Many of the companies that Ex-Im claims can’t access capital without government help are, by and large, the most creditworthy corporations in the world, operating in the world’s deepest capital market. They don’t need taxpayer-backed financing. They used such financing only because it was available at rates cheaper than market rates, not because financing at market rates wasn’t available.
This matters for the current debate because, if export subsidies are problematic as is the ExIm Bank, expanding its authority into industrial policy, equity-like risk, and private-sector stockpiling of rare-earth minerals (more on this tomorrow) like Senators Cramer and Warner want Congress to do doesn’t improve the picture. It compounds the original error at dramatically higher stakes.