The ongoing trade conflict between the United States and China has reached a critical juncture surrounding the contentious issue of rare earth minerals. Recently, China escalated its restrictions on the export of these vital elements, prompting a stern response from U.S. President Donald Trump, who hinted at possible economic retaliation and suggested the cancellation of an upcoming meeting with Chinese President Xi Jinping during a visit to Asia.
This dispute over rare earths is not new; it has been a point of contention for years, reflecting a broader strategy within China’s industrial policy to maintain significant control over these essential materials. China’s recent actions are viewed as a direct reaction to Trump’s introduction of “reciprocal tariffs” on Chinese goods earlier this year.
Despite expectations that China would ease its export constraints following an agreement on a trade truce in Geneva, the latest restrictions have reinforced concerns about the complex dynamics of the trade relationship.
Rare earths comprise 17 metallic elements, including scandium, yttrium, and various lanthanides. The term “rare earths” can be misleading, as these materials are relatively abundant in the Earth’s crust, exceeding the availability of gold. However, they are challenging and costly to extract and process, often resulting in environmental degradation.
These minerals are integral to numerous technologies prevalent in daily life, including smartphones, wind turbines, LED lights, and flat-screen televisions. They are vital for the production of batteries for electric vehicles, as well as in medical applications like MRI scanners and cancer therapies. The U.S. military also relies on rare earths for advanced equipment, including F-35 fighter jets and various missile systems.
According to the International Energy Agency, China accounts for 61% of mined rare earth production and controls a staggering 92% of the global processing output. Rare earths are further categorized into two types: heavy and light, with heavy rare earths being particularly scarce. The U.S. lacks the capability to separate these minerals once they are extracted, often sending mined materials to China for processing.
In April, the Trump administration’s sharp tariffs on Chinese imports complicated the U.S.’s already precarious position. Experts note that China’s strategy appears to leverage U.S. dependence on its processing capabilities amid rising tensions. Currently, California remains the sole operational rare earth mine in the U.S.
Beijing’s latest restrictions on rare earths come ahead of a highly anticipated meeting between Xi and Trump at the upcoming Asia-Pacific Economic Cooperation (APEC) summit. China has added five more rare-earth elements—holmium, erbium, thulium, europium, and ytterbium—to its list of controlled exports, now totaling twelve restricted minerals. This new measure includes requiring export licenses for manufacturing technologies, further tightening China’s grip.
The ramifications of these restrictions could be profound, as the U.S. is heavily reliant on China for rare earth supplies, with approximately 70% of U.S. imports coming from there between 2020 and 2023. As the trade war intensifies, China’s recent actions are viewed as a notable escalation.
In response, Trump issued a warning via social media, stating that he would be compelled to counter China’s restrictions financially. He expressed a belief that the U.S. possesses sufficient rare earth resources to counteract China’s monopoly, asserting, “For every Element that they have been able to monopolize, we have two.”
This situation underscores the critical implications of rare earth minerals within the ongoing trade war and highlights the strained relations between the two global powerhouses.
