China’s exploitation of its monopoly over rare earth elements has become a major sticking point in high-stakes trade talks with President Trump – and experts warn the US needs to prepare for the worst.
First announced in April, China’s licensing requirements on rare earth magnets left Western firms scrambling to restock before their dwindling stockpiles ran out.
The broad shift toward “just-in-time” supply chains over the last few decades means many companies retain just three-to-six months’ worth of critical minerals.
During Tesla’s April 22 earnings call, Musk admitted that China’s export controls on rare earth magnets could delay production of the company’s Optimus humanoid robot.
Rob Wittman (R-Va.), who leads the House Select Committee on China’s Critical Minerals Policy Working Group, has backed a trio of bills aimed at fixing the US supply chain and fighting back against China’s attempts to leverage its monopoly.
Experts advise the United States to brace for the worst as China’s exploitation of its monopoly over rare earth elements has emerged as a major point of contention in high-stakes trade negotiations with President Trump.
By refusing to relax its restrictions on exports of seven “heavy” rare earth metals—which are necessary for military equipment like F-35 fighter jets and drones as well as devices like smartphones and electric cars—Beijing has angered Trump administration officials.
A 90-day tariff truce that expires in mid-August was part of a preliminary trade agreement reached in Geneva, which Trump blasted China for “totally violating” on Friday. One worry, according to US Trade Representative Jamieson Greer, is that China “continues to, you know, slow down and choke off” the flow of vital minerals to the US. Trump did not go into further detail.
In an announcement on Sunday, Treasury Secretary Scott Bessent stated that Trump and Chinese President Xi Jinping will meet shortly to resolve trade issues, including the key mineral dispute.
The products that China is preventing from reaching India and Europe’s industrial supply chains are crucial. In an interview with CBS’ “Face the Nation,” Bessent stated, “And that is not what a reliable partner does.”. “.”.
“Some of the products that they agreed to release during our agreement are being withheld; perhaps this is an intentional omission or a glitch in the Chinese system. After the President talks with the party chairman, we’ll know. “”.
However, veteran mining executive Mark A. says any discussion of a trade truce from China is “little more than window dressing.”. Smith, whose business NioCorp is working on a rare earths facility in Nebraska.
Smith claimed that China is deliberately selecting minerals for export restrictions that disproportionately affect our national defense and military preparedness. Almost every card is in their possession. “.”.
In what DC insiders and other experts characterize as a highly targeted campaign to disrupt US defense and tech supply chains, China has imposed export controls on at least 16 critical minerals since 2023.
For the seven heavy rare earth metals that the new licensing regulations were most recently aimed at, up to 99 percent of the world’s processing capacity is in China. By enforcing increasingly stringent export regulations on US-made computer chips required for artificial intelligence, the Trump administration has reacted negatively to China.
Many believe that Trump’s plan to reduce the nation’s dependency on China includes acquiring resource-rich Greenland. Even though negotiations to end the war with Russia have failed, the US recently reached an agreement with Ukraine on mineral rights.
It will take a long time for the mineral sites in Greenland and Ukraine to meet US demand, though. In order to reduce dependency on China, experts said they are best viewed as a component of a larger plan that also entails close cooperation with allies that have abundant natural resources and more domestic mining.
When briefed on the situation, a House aide told The Post, “It’s a reliability of access problem.”. “At this point in time, I believe we are incredibly unprepared, and processing capacity cannot be purchased. “.”.
Despite its seeming impossibility, the possibility of a complete embargo in reaction to escalating geopolitical tensions has happened before. While Japan and China were embroiled in a territorial dispute in 2010, China momentarily caused an uproar by stopping shipments of rare earth elements to Japan.
In the event of a more significant diplomatic conflict with the US, such as a possible invasion of Taiwan, some insiders predict that China would unavoidably use similar strategies.
Rep. said Congress should “be prepared for the worst.”. Bacon, Don (R-Neb. ), a former Air Force officer and House Armed Services Committee member.
During an interview, Bacon stated, “After 30 years in the military, I found that we tend to underestimate the enemy’s intentions but exaggerate their capabilities.”. “And if China has the option and we’re playing hardball, then, yeah, they can shut this stuff down if they want to,” I believe. It is crucial that we look for other areas because of this. “.”.
After former President Joe Biden “deprioritized domestic mining and delayed permitting for years in favor of ‘green’ energy projects,” a White House official stated that Trump is making amends. “.”.
The official stated, “President Trump has taken bold, decisive steps to reverse course in his first 100 days in office.”. “He started a National Critical Minerals Strategy, expedited permitting for important projects, started a Section 232 investigation into Chinese mineral imports, and signed Executive Order 14241 to increase American mineral production.”. “.”.
To further strengthen US leadership in this crucial area, the White House official stated, “the administration is also pursuing new market mechanisms, export controls on mineral recycling, and a fund.”.
In a recent study, the Center for Strategic and International Studies cautioned that any disruption to heavy rare earth shipments would put the US military at “extraordinary risk.”.
When China’s rare earth magnet licensing requirements were first announced in April, Western companies were frantically trying to replenish their declining supplies before they ran out. Since supply chains have shifted to “just-in-time” over the past few decades, many businesses only keep three to six months’ worth of essential minerals.
As the CEO of Tesla, Elon Musk has developed strong relationships with both Trump and Beijing, but he is not exempt from the consequences. China’s export restrictions on rare earth magnets may cause production of Tesla’s Optimus humanoid robot to be delayed, Musk acknowledged during the company’s April 22 earnings call.
The House aide said that executives from a variety of industries, including metals traders, are already “very, very concerned” and have started to raise the alarm on Capitol Hill about the severe economic consequences of a prolonged shutdown.
The House aide claimed that the emails they receive regarding the possible effects of a long-term, significant rare earth control on the US market are “quite frantic.”.
Congress is working on some legislation to deal with the emerging crisis. Representative. Wittman Rob (R-Va. ), who is the head of the Critical Minerals Policy Working Group of the House Select Committee on China, has supported three bills that aim to improve the US supply chain and counter China’s attempts to use its monopoly.
Industry representatives have also urged the US government to relax onerous rules and environmental permitting procedures that have discouraged investment in rare earth mining and significantly delayed ongoing projects, as The Post has reported.
