A Strategic Retaliation Amid Trade War
As the trade standoff between China and the United States intensifies, China has taken a strategic step that may prove more disruptive than tariffs: imposing export restrictions on rare earth minerals and magnets. These elements, critical to a wide range of high-tech and defense applications, have long been dominated by Chinese production. While tariff exchanges have garnered the most attention, this move highlights Beijing’s deeper leverage in the global supply chain.
China’s Rare Earth, a group of 17 chemically similar elements, are indispensable in the manufacturing of products ranging from electric vehicle motors and computer hard drives to fighter jets and missiles. Though abundant in the Earth’s crust, they are rarely found in concentrated forms and require costly and hazardous extraction processes. China controls about 61% of global rare earth mining and an overwhelming 92% of refining operations, according to the International Energy Agency (IEA).
In early April, Beijing announced that exports of seven types of rare earth minerals—particularly the more valuable and harder-to-process “heavy” rare earths—would require special licenses. These restrictions are enabled by China’s status as a signatory to international treaties regulating the trade of dual-use products, which have both civilian and military applications.
A Blow to U.S. Defense and Industry
The U.S. relies heavily for its supply of China’s Rare Earth, with imports accounting for 70% of all rare earth compounds and metals between 2020 and 2023. This dependence makes the U.S. particularly vulnerable to the new Chinese export restrictions. Heavy rare earths are crucial in the defense sector—used in radar systems, missile guidance technologies, and components for military jets like the F-35.
A report from the Centre for Strategic and International Studies (CSIS) underscores this threat, noting that China’s restrictions come at a time when it is expanding its military capabilities at a pace far exceeding that of the U.S. The shortage of these minerals could also slow down production across the tech and manufacturing industries, undermining President Trump’s goal of revitalizing American manufacturing through tariffs.
Dr. Gavin Harper, a critical materials expert, warns that manufacturers could face delays and increased costs. “Prices for critical rare earth materials are expected to surge,” he said, affecting the production of everything from smartphones to military hardware. Trump has responded by ordering the U.S. Commerce Department to explore strategies for boosting domestic rare earth production and reducing reliance on imports.
Limited Options for U.S. Diversification
Although the U.S. operates one rare earth mine, it lacks the facilities to separate heavy rare earths, and still depends on China for processing. Historically, the U.S. led the rare earth industry until the 1980s, when Chinese producers undercut competitors with cheaper labor and looser environmental regulations. Now, regaining that lead would require substantial investment, new technologies, and likely higher production costs.
President Trump has floated potential partnerships with Ukraine and Greenland, both rich in rare earth reserves. However, strained diplomatic relations and aggressive rhetoric may hinder these opportunities. Dr. Harper notes that the U.S. faces a dual challenge: alienating its dominant supplier, China, while also testing relationships with potential allies through hostile trade policies.
As the China’s Rare Earth supply chain becomes a new front in the U.S.-China trade war, the stakes are high. America’s economic resilience and national security may depend not only on access to these critical materials but also on its ability to rebuild global trust and establish sustainable alternatives.
