Their names are difficult to pronounce, essential to modern manufacturing, and are at the heart of the escalation of the trade war between the US and China.
The global supply of these rare earths – a key group of 17 factors that find themselves in everything from electric vehicle batteries to critical defense technologies – is primarily controlled by China.
Beijing is currently looking to use its strategic leverage amid growing trade zones with Washington and growing tensions.
In response to what was recently imposed CustomsChina has restricted its sales to seven rare earth US. Although it is not completely banned, the move requires producers to apply for export licenses from the Chinese government. There is also growing concern that could lead to price and supply shocks that could be particularly violently hit by US defense companies.
“Oil in the 20th century is rare earth minerals on the 21st,” said Sean McFate, an adjunct professor at Maxwell School of Citizenship and Public Affairs at Syracuse University. “Microchips, green technology, and quantum computing all require rare earths, and China has a large portion, which is a national security order beyond the stock market.”
Beijing It controls more than two-thirds of the world’s rare earth production Over 90% of processing capacity. China also effectively retains the supply of global heavy rare earth processing, a subset of the elements used in the US defense sector, to make strong magnets important for the production of fighter jets, warships, missiles, tanks and lasers.
While we see exactly how China will implement these new restrictions, a report from the Center for Strategic and International Studies (CSIS), a Washington-based think tank, warned that Beijing would likely lead to a moratorium on exports as it would establish a licensing system and cause disruption in supply to some American companies, particularly companies in the national security sector.
“The US is particularly vulnerable to these supply chains.” Report from April 14th. “There is no heavy rare earth separation in the US right now.”
How does China limit rare earths?
The new export restrictions apply to seven moderate and heavy rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. All of these play a major role in the defense sector.
For example, Yttrium is used as a high temperature coating for jet engines to prevent them from melting during flight.
Analysts say Beijing is trying to capitalize on the dependency.
The Pentagon and US companies maintain their reserves, but it is not estimated to be large enough to last long supply chain disruptions. In addition to banning the elements themselves, Beijing has placed 16 US entities – all but one of them are in the defense and aerospace industries – the export control list has restricted receiving double-use goods, including rare earths.
Dimiter Guergiev, an associate professor at Syracuse University, says he further considers the latest restrictions as a move by Beijing to signal “the ability to narrow down these exports as the trade war escalates further.”
“Most importers have had this concern on their horizon for a while, so it’s likely they’ll be stockpiled for at least a few months,” he said.
Still, the measures and ability to escalate them are formidable tools for China. Beijing’s market advantage can also direct prices beyond its ability to suppress supply. This means you can increase the costs of certain customers, or control rare earth supply by keeping fees low.
This has been seen in past measures implemented by China. In 2023, Beijing restricted exports of gallium and germanium used in chips, radar and satellites. This was followed by a ban on exports to the United States in December 2024.
Prices have since risen sharply and the global market has fractured. According to Consultancy Project Blue, gallium purchased from Western countries is 2-3 times more expensive than those purchased in China.
The CSIS report also warns that China’s export controls pose a direct threat to US military preparations, increasing concerns that lawmakers and analysts are lagging behind in the manufacture of national defense.
“Even before the latest restrictions, U.S. defense industrial bases suffered from limited capabilities and lacked the ability to expand production to meet the demand for defence technology,” the report said.
The authors of the report cite estimates by US Air Force officials in 2022 that China is acquiring advanced weapons systems and equipment five to six times faster than the US.
“A further ban on critical mineral inputs will only widen the gap and allow China to strengthen its military capabilities more quickly than the US,” the report concludes.
How can the US respond?
Faced with pressure from China, experts say the US needs to enact policies to enhance production from home and examine new sources overseas.
Like in the 1980s, the United States was a leader in rare earth production, but rising prices led to the flagship of the Mountain Pass Mine in California, which was shut down in the early 2000s.
President Donald Trump then resumed his first term, resuming history by resuming successive US administrations.
However, catching up to China with rare earths and other important minerals is time-intensive and expensive. Some also said other parts of the tariffs Trump has implemented could have knock-on effects, making it difficult to scale up quickly in rare earth production.
Above Rare Earth Exchanges podcastindustry entrepreneur Daniel O’Connor said tariff materials such as steel and aluminum are important in mining and processing. “Don’t put tariffs on what’s necessary to build infrastructure,” he said.
Against this backdrop, the US is trying to secure supplies overseas along with the Trump administration. I’m looking for greater access Greenland’s rare earths and other important minerals UkraineIt’s where Kyiv and Washington are. It is reportedly It’s close to achieving a transaction.
Washington also sponsors new mines in Brazil and South Africa, with the US funded First major heavy rare earth processing facility In Texas, outside of China, it takes several years to show results.
In the meantime, Beijing is expected to continue succumbing to rare earth metals as a tension flare with Washington.
“This has become part of Beijing’s playbook as we push Washington back,” says Neil Shearing, group chief economist at Capital Economics. I wrote it April 14th.
“The weapons of this control over important minerals, and races by other countries to secure alternative supplies — will become a central feature of the fractured world economy.”
By RFE/RL
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