The United States has a genuine opportunity to reduce its reliance on the People’s Republic of China (PRC) for rare earth elements, but experts warn that it will require decisive action to make it happen.
Rare earths consist of 17 metal elements that are crucial for a variety of sectors, including vehicle manufacturing, defense, renewable energy, smartphones, and medical technology. Despite their importance, the US imports about 80% of these minerals, primarily from China, which is responsible for the bulk of global rare earth mining and 92% of purification.
“This isn’t an unsolvable problem for the US,” said a senior economist at the American Enterprise Institute, noting that it’s a matter of willingness to act, rather than capability.
The risks of depending on China came sharply into focus when Beijing implemented new export controls on certain rare earth elements earlier this year, a move seen as retaliation for tariffs imposed by President Trump. This has led to significant disruptions in supply chains.
In May, Ford had to temporarily halt production at its Chicago plant due to a shortage of these elements, highlighting the immediate challenges that can arise from such dependency. Even after saying it would address export issues, reports indicated that China continued to delay approvals for necessary licenses.
Historically, Beijing has not shied away from using its control over rare earth minerals as a leverage point. A notable instance was in 2010 when China halted rare earth shipments to Japan amid a territorial dispute, raising concerns about how such leverage could be wielded in future conflicts.
Recently, a House committee noted that in the event of a conflict, such as over Taiwan, China might limit access to critical minerals, urging Congress to act swiftly to reduce reliance on the PRC.
“If the US loses access to these critical minerals, it could face significant shortages in both commercial and defense manufacturing,” a recent presidential order indicated, pushing for an investigation into potential tariffs on essential minerals.
However, progress in securing a domestic supply chain for rare earths has been slow. Experts argue that simply focusing on trade negotiations with China won’t address underlying issues, like China’s strategy to undermine competitors and stringent environmental regulations affecting US projects.
“Long-term trade restrictions from China are a reality we need to prepare for,” said one expert, stressing the risks behind relying on a single production source.
For years, China has flooded the market with low-cost rare earths, often subsidizing losses to undercut emerging competition. In 2021, China consolidated three major producers into a single state-owned enterprise to enhance its control over production and prices.
Experts suggest that the US should invoke section 232 of the Trade Expansion Act to counteract China’s market manipulation.
“If we’re frantically negotiating with China over rare earths, we should seriously consider taking bold domestic actions,” a commentator observed. “In fact, the cost of sourcing away from Chinese supplies isn’t prohibitively high; it just comes down to a willingness to pay a bit more for stability.”
Additionally, suggestions were made to reform domestic regulations that currently slow down mining operations, potentially stunting the development of resources like lithium.
While rare earth mining and processing can be environmentally harmful, China has historically overlooked these concerns. However, some companies are exploring new, cleaner methods for extraction. One company, for example, has developed a process that doesn’t produce toxic waste and is already eyeing expansion plans.
This company currently operates a facility in Massachusetts and plans to open another in New Hampshire, aiming to meet a significant portion of US needs.
“The US can absolutely lead in this sector,” said a representative from the company. “China’s approach may seem efficient, but it’s really not sustainable. With the right innovations, there’s a path to become a cost-effective leader in rare earth production.”
