In response to Donald Trump’s escalating tariffs, China retaliated in part by placing export restrictions on a slew of rare earth elements. These powerful materials are crucial to the U.S., because they underpin the creation of weapons, computer chips, and electric cars. China produces a majority of these rare earth materials—and experts say that the U.S. is years away from building its own supply chain.
As the U.S.–China trade war ramps up, rare earths are among the most important pieces of leverage that China controls. There are many reasons why China would not want to shut off U.S. access to rare earths completely, most notably that the country makes a lot of money from exporting them. But if China decides to further choke off its supply, the ripple effects could be extremely painful across many industries, says Lyle Trytten, a critical minerals expert. “The U.S. does not have the means to create the materials it needs to create the devices it survives on,” he says.
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Rare earth’s importance
The importance of rare earths has only increased over the years, due to the world’s reliance on ever-powerful computers and its search for cleaner energy. Dysprosium and terbium, for example, are found in smartphones’ vibration units. Neodymium powers the motors of electric vehicles. Tungsten, an ultra-hard metal, is used in ammunition, semiconductor chips, and alloys found in jet engines and deep-drilling rigs.
Almost all of these materials are mined and processed by China, which has spent decades aggressively building the infrastructure to do so. As a result, many companies, including Tesla and Apple, source their rare earths from China. Recently, China has not hesitated to wield this dominance as a geopolitical bargaining tool. In 2010, China halted rare-earth exports to Japan amidst rising tensions. Over the past two 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,” says Fabian Villalobos, an engineer at RAND. “Critically, the separation of heavy rare earths from the light rare earths is where China has a dominance, and therefore there’s a vulnerability in the supply chain.”
The White House signaled its understanding of the fragility of the current ecosystem when it exempted critical minerals from its tariffs regime this month. But that did not stop China from issuing export controls on seven kinds of rare earth elements, to all countries, on Friday. The decision is not a ban, but it does give Beijing oversight and control over access to the rare earth elements. China said that its export controls will not affect the rare earth supply chain.
Crucially, China omitted several of the most-coveted rare earth elements, including neodymium and praseodymium. But the controls show that China is willing to use these materials as a bargaining chip and could escalate their restrictions if tensions increase. “Consider this an opening shot across the bow,” says Trytten. The listed elements also include those found in microchips used for AI—a further indication of the ongoing AI arms race between the two countries.
Villalobos says that in the short term, there will likely be a slowdown of rare earth exports as companies apply for licenses to adhere to the export controls. “You might see a temporary dip in exports, and then a ramping up as more companies get their licenses,” he says.
But Villalobos says the greater threat to U.S. companies could come afterward, once China starts collecting detailed information about the rare earth market—which then gives China the ability to impose damaging sanctions upon specific companies. That could include U.S. defense companies like Lockheed Martin, which needs rare earths for components in missile systems and fighter jets. “This is the danger: 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,” he says.
U.S. capacity
Many experts have long called for the U.S. to wean itself off of this dependence. Some believe that the solution is to mine rare earths on the moon. Other entrepreneurs have started projects building mines and processing facilities across America. Trump’s tariffs, then, could incentivize these kinds of shifts; to force American companies to build up supply chain resilience. “Maybe it will move the ball on investments, which is one of the big barriers to diversifying critical mineral supply chains,” Villalobos says.
But rare earths and other minerals are extremely intensive to process—and the U.S. does not have the infrastructure to scale these efforts quickly, Trytten says. The number of graduates of U.S. mining engineering programs has steadily declined over the last few decades, potentially leading to a lack of expertise. Trytten says that there is danger in rushing new mining projects into production. “The history of our industry in the metal space is that when we try to do things fast, we tend to do them poorly,” he says.
Because of these factors, Trytten contends that even if a new wave of mining projects is kickstarted now, they will not come to fruition until long after Trump has left the White House. “Call it eight to 10 years before you have significant new capacity for a lot of these raw materials,” Trytten says. “Can he weather the storm that long?”
Other experts say that various other parts of Trump’s tariffs make it hard for them to scale up their state-side infrastructure. On the Rare Earth Exchanges podcast, the entrepreneur Daniel O’Connor said that tariffed materials like steel and aluminum are crucial toward mining and processing. “Let’s not do tariffs on things we need to build our infrastructure,” he said.
Rare earths in Greenland?
Some have speculated that rare earths play a major 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. But extracting resources out of Greenland poses many challenges. “Greenland has very little domestic energy production, and you can find those resources pretty much anywhere,” Trytten says. “There are much easier mining locations than the Arctic.”
Regardless of whether Greenland is a viable option, many U.S. companies are now being forced to pursue non-Chinese rare earth options, even if it takes them 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,” Villalobos says. “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.”
