In response to Donald Trump’s escalating tariffs, China retaliated by placing export restrictions on a range of rare earth elements. These materials, crucial to the U.S. for the production of weapons, computer chips, and electric vehicles, are primarily produced by China. Experts argue that the U.S. is years away from developing its own supply chain for these critical materials.
Rare Earths as Leverage in the U.S.-China Trade War
As the U.S.–China trade war intensifies, rare earths have become a key bargaining chip for China. While China has many reasons not to completely cut off U.S. access to these materials—particularly the significant revenue generated from exports—the potential impact of further restricting supplies could be severe across multiple industries. “
The U.S. does not have the means to create the materials it needs to create the devices it survives on,” says Lyle Trytten, a critical minerals expert.
The Growing Importance of Rare Earths
The significance of rare earths has grown over time, driven by the world’s increasing reliance on powerful computers and the quest for cleaner energy. Elements like dysprosium and terbium are used in smartphone vibration units, while neodymium powers electric vehicle motors.
Tungsten, an ultra-hard metal, is critical for ammunition, semiconductor chips, and alloys found in jet engines and deep-drilling rigs.
China is the dominant force in mining and processing these materials, having spent decades building the necessary infrastructure. As a result, companies like Tesla and Apple rely heavily on Chinese imports of rare earths.
China has not hesitated to wield its dominance as a geopolitical tool. In 2010, China halted rare earth exports to Japan amidst rising tensions, and in recent years, Beijing has imposed curbs on other critical minerals, such as gallium, germanium, and graphite.
“It’s pretty predictable now that once the U.S. pulls something—whether it’s an export control on a particular technology or a tariff—this is China’s chosen weapon,” explains Fabian Villalobos, an engineer at RAND. The separation of heavy rare earths from light rare earths, where China holds a distinct advantage, represents a vulnerability in the supply chain.
China’s Export Control Strategy
The White House acknowledged the fragility of the current supply chain when it exempted critical minerals from its tariffs regime. However, that did not stop China from imposing export controls on seven kinds of rare earth elements on a global scale.
Although this move is not a ban, it grants China oversight and control over access to these materials. China’s statement suggests that the export controls will not disrupt the rare earth supply chain.
Crucially, China excluded some of the most coveted rare earth elements, such as neodymium and praseodymium. However, the imposition of controls signals China’s willingness to use these materials as a bargaining tool, with the potential to tighten restrictions if tensions escalate. “Consider this an opening shot across the bow,” says Trytten.
The controls also target elements used in microchips critical to AI technologies, indicating the ongoing AI arms race between the two nations.
Immediate and Long-Term Implications
In the short term, Villalobos anticipates a slowdown in rare earth exports as companies apply for licenses to comply with the new export controls. “You might see a temporary dip in exports, and then a ramping up as more companies get their licenses,” he says.
However, the greater risk for U.S. companies lies in the long term. China’s ability to gather detailed information about the rare earth market could lead to targeted sanctions against specific companies.
This could include U.S. defense contractors like Lockheed Martin, which rely on rare earths for missile systems and fighter jets. “The more information you can gather from exporters, the more you can target specific companies that you don’t want getting access to rare earth,” says Villalobos.
The U.S. Effort to Develop Its Own Capacity
Experts have long called for the U.S. to reduce its dependence on China for rare earths. Some have even suggested the possibility of mining rare earths from the moon. Meanwhile, some U.S. entrepreneurs are working to build domestic mining and processing facilities.
Trump’s tariffs could, in theory, encourage these shifts by incentivizing U.S. companies to develop more resilient supply chains. “Maybe it will move the ball on investments, which is one of the big barriers to diversifying critical mineral supply chains,” Villalobos suggests.
Yet, rare earths and other minerals are extremely challenging to process, and the U.S. lacks the infrastructure to scale these efforts quickly, according to Trytten.
The decline in the number of graduates from U.S. mining engineering programs could lead to a shortage of expertise. “When we try to do things fast, we tend to do them poorly,” he says, expressing concern over the potential pitfalls of rushing new mining projects.
Even if new mining efforts are launched today, Trytten predicts it will take eight to 10 years for significant new capacity to materialize. “Can he weather the storm that long?” he questions, referring to the challenges the U.S. may face before such efforts bear fruit.
The Greenland Debate
There is speculation that rare earths may also play a role in Donald Trump’s interest in Greenland. Tech giants like Bill Gates and Jeff Bezos have invested in companies prospecting for rare earths there.
However, extracting resources from Greenland poses considerable challenges. “Greenland has very little domestic energy production, and you can find those resources pretty much anywhere,” says Trytten. “There are much easier mining locations than the Arctic.”
Regardless of Greenland’s viability as a solution, U.S. companies are increasingly seeking alternatives to Chinese rare earths, even if it takes years to develop. “
Think about every automated thing: If you push a button and it moves, it’s probably reliant on some sort of rare earth magnet,” says Villalobos. “Whoever makes that, if they’re in the U.S., Japan, or anywhere outside of China, they’re going to feel the impact from this—and they might be potential targets for sanctions in the future
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