As the trade dispute between the United States and China grows fiercer, Beijing has retaliated by blocking rare earth exports. Washington and Beijing have continued exchanging escalating tariffs, but China chose an additional pressure tactic. Beijing now restricts exports of crucial rare earth materials, seriously impacting the United States. This decision highlights America’s heavy reliance on these strategically vital elements. In response, President Trump instructed the Commerce Department to find ways to increase domestic mineral production. The US wants to reduce its dependency on imports and revive its control over a crucial industrial sector. Why are these minerals so important, and what role might they play in reshaping this conflict?
Rare Earth Elements: Small Components, Massive Impact
The term “rare earths” refers to 17 elements essential to advanced manufacturing processes. They appear frequently in nature, but are rarely found in a pure form, making extraction very difficult and hazardous. Although names like Neodymium, Europium, and Yttrium sound unfamiliar, their applications are widespread. Neodymium enables the creation of strong magnets used in hard drives, EV motors, jet engines, and speakers. Europium and Yttrium help produce vibrant displays in televisions and computers. “Nearly every device that can be turned on or off relies on rare earths,” explains Thomas Kruemmer of Ginger International Trade. They also serve in cutting-edge healthcare tools like MRI machines and laser surgery equipment. Moreover, they are vital for advanced military systems and sensitive defence technology.
China’s Command of Global Rare Earth Resources
China controls both rare earth extraction and the complex refining process that separates usable elements. According to the International Energy Agency, China mines around 61% of these minerals and refines approximately 92%. This dominance lets Beijing influence which global companies can access these materials. The extraction and processing of rare earths create pollution and involve radioactive elements. Because of these environmental hazards, many countries—especially in Europe—avoid mining and processing them. “Europe only operates temporary storage for radioactive waste from production,” Kruemmer points out. China’s monopoly came from years of focused policy and long-term investments, not from short-term actions. In 1992, Deng Xiaoping, China’s then-leader, emphasized their importance by saying: “The Middle East has oil, China has rare earths.” Since the late 20th century, China invested heavily in this sector, accepting lower labor and environmental standards. This approach enabled China to outcompete rivals and seize near-total control over the entire supply chain.
Beijing’s Strategic Export Restrictions and Their Fallout
Recently, Beijing began limiting exports of seven specific rare earths, primarily “heavy” rare earths used in defence. These materials are more rare and harder to process, increasing their strategic and economic value. Since 4 April, companies must obtain special permits to export these minerals or related products from China. As a member of the global Non-Proliferation Treaty, China can control items deemed dual-use with civilian and military functions. The Centre for Strategic and International Studies warns that the United States lacks capacity to refine heavy rare earths. Between 2020 and 2023, the US sourced about 70% of its rare earth imports from China, according to US Geological data. Heavy rare earths play roles in missiles, radar systems, and permanent magnets. Technologies such as F-35 jets, Tomahawk missiles, and Predator drones depend on these materials. Meanwhile, China is rapidly expanding weapons production and acquiring advanced systems at unmatched speed. “This will heavily impact the US defence industry,” Kruemmer asserts. Manufacturing across civilian sectors will also suffer, despite Trump’s ambitions to revive it through tariffs. “Factories in tech and defence will see delays and material shortages,” says Dr Harper of the University of Birmingham. Rising prices for rare earths will increase costs for components in everything from smartphones to military systems. US companies may face major slowdowns unless they identify other suppliers or improve domestic supply chains. However, boosting local production would demand massive investment, cutting-edge tech, and higher long-term costs. This week, Trump initiated an inquiry into national security threats from overreliance on foreign mineral supplies. The administration warned that depending on imports risks America’s defences, economy, and innovation strength.
Why the US Cannot Break Free Easily
The United States operates just one rare earth mine but lacks the facilities to process heavy rare earths. Current US output is shipped to China for refining—demonstrating ongoing dependency. While the US led rare earth production until the 1980s, companies exited the market when China offered lower prices. Trump aims to sign a mining deal with Ukraine and reduce reliance on Beijing. He also focused on Greenland, which holds the world’s eighth-largest rare earth reserves. The President has even hinted at using economic or military means to gain influence in the Danish territory. However, recent tensions with potential allies complicate any efforts to diversify rare earth sources. “The US finds itself isolated,” says Dr Harper, “alienating both its key supplier and potential new partners.” Whether these nations will still cooperate with Washington remains uncertain in today’s volatile political climate.
