Tensions between the United States and China have significantly escalated over the control of rare earth minerals, a critical resource for various high-tech applications, including semiconductors, electric vehicles, smartphones, and military technologies. Recent moves by China to impose export controls have raised alarms in Washington, but some analysts view the reactions from both sides as mere posturing rather than a substantial shift in strategy.
US Treasury Secretary Scott Bessent characterized China’s recent actions as “rogue” trade moves ahead of a proposed summit between President Trump and Chinese President Xi Jinping, asserting that Beijing’s reliability as a trade partner is in question. However, this sentiment overlooks a long history of US negligence in securing its own rare earth supply chain. For decades, the US has allowed China to quietly consolidate its grip on this essential industry.
China’s ambitions regarding rare earths can be traced back to a 1992 declaration by Deng Xiaoping, who envisioned rare earth minerals as “the oil of China.” A pivotal moment occurred in the mid-1990s when the US government, during the Clinton administration, approved the sale of Magnequench—a rare earth magnet manufacturer—to Chinese interests with strong ties to the government. This decision, meant to safeguard jobs, ultimately led to the relocation of production to China, exacerbating the US’s dependence on foreign supplies.
Critically, the closure of the Mountain Pass mine in California, once the world’s top producer of rare earth minerals, marked a significant turning point. Environmental regulations and a lack of industrial policy led to its shutdown in 2002. Although the mine reopened in 2012, the absence of domestic refining capabilities meant that the US had to send its raw materials to China for processing. This dependence allowed China to employ aggressive strategies—such as low-cost production, state aid, and export restrictions—to dominate the global rare earth market.
The weaponization of rare earths is not a new tactic for China. Histories of past diplomatic disputes, like the one with Japan in 2010, demonstrated its willingness to use export controls as a negotiating tool. Despite winning a World Trade Organization challenge against China’s rare earth export limits in 2012, the US and its allies found themselves in a vulnerable position, as critical infrastructure had already shifted heavily toward China.
US policymakers, including defense officials, have long warned about this critical dependence. Michael Wessel, a US-China commissioner, highlighted in 2020 that Chinese officials had stated they might leverage rare earth exports amid escalating trade tensions with the US.
Amidst these ongoing concerns, the Biden administration has made efforts to revitalize domestic production of rare earths, including funding for Noveon Magnetics, the country’s only rare earth magnet manufacturer. Under the Trump administration, there appears to be a renewed commitment to establish a more robust domestic supply chain, with substantial investments aimed at enhancing mining and production capabilities.
As both nations continue to engage in this high-stakes game, observers predict that the shadow boxing over rare earth minerals will persist alongside a renewed urgency to rebuild domestic capabilities in the US. This protracted conflict underscores the critical need for comprehensive strategies to navigate the increasingly contentious landscape of global trade and resource dependency.
