Highlights

• The U.S. remains heavily dependent on foreign sources for critical minerals, with 100% import dependence for multiple key minerals and 80% rare earth imports from China.
• Global demand for rare earth elements is projected to increase sevenfold by 2040, driven by clean energy, electric vehicles, and advanced defense technologies.
• Strategic policy interventions are crucial to transform the U.S. from a dependent importer to a resilient critical mineral producer within the next decade.

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The U.S. supply chain for rare earth elements (REEs) and other critical minerals remains structurally fragile—import-dependent, geopolitically exposed, and increasingly outpaced by global demand. Despite years of policy rhetoric, the United States continues to rely overwhelmingly on foreign sources for materials that underpin clean energy, advanced electronics, and national defense.  True, the latest Trump administration has dedicated more bandwidth to addressing, with executive orders, a 232 action, and more dollars, not to mention the Department of Defense (DoD) move to invest and own 15% of MP Materials—the nation’s only operational rare earth mining operation. But without a comprehensive, integrated, and multinational rare earth element and critical mineral industrial policy, independence from China anytime in the next several years is not likely.

Import Dependence

According to the latest U.S. Geological Survey data, the U.S. is 100% dependent on imports for a dozen key minerals—including gallium, cesium, and scandium—and over 50% reliant on nearly 30 others, among them the lanthanides. Roughly 80% of rare earth imports come from China, which also controls nearly all global processing capacity. Even where domestic mining is viable, separation and refining are typically performed abroad, leaving U.S. industry exposed to China’s grip on advanced materials.

Uranium shows a similar pattern. The U.S. imports the vast majority of its nuclear fuel, with significant volumes historically sourced from Russia and its allies. Even with bans in place, loopholes and third-country routing remain points of vulnerability.

Geopolitical Distortion

China wields its dominance strategically. Export controls on heavy REEs such as dysprosium and terbium target sectors critical to defense, while subsidies and VAT rebates shape global magnet markets. Restrictions aimed at U.S. defense contractors further tighten leverage. Russia, for its part, uses Cold War–era nuclear infrastructure to maintain influence in uranium markets. Together, these state-backed approaches distort competition and present formidable barriers for U.S. producers to scale.

Demand Rising Fast

Meanwhile, demand is on a steep upward trajectory. The International Energy Agency projects global rare earth demand to increase sevenfold by 2040, fueled by electric vehicles, wind turbines, robotics, and advanced defense platforms. Uranium is likewise set for steady growth as nuclear energy expands its role in low-carbon strategies.

Opportunities and Constraints

The United States has geological potential, but its value chain remains thin. Domestic separation capacity is minimal, and permitting timelines slow progress. While allied sources of heavy mineral sands in regions such as Australia, Africa, and South America could feed U.S. facilities, those flows require investment, infrastructure, and political will to redirect away from China’s entrenched processing ecosystem.

Policy Pathways

Analysts point to several levers for resilience:

Targeted Tariffs and Incentives

Impose tariffs to blunt predatory pricing from state-backed competitors, while pairing them with tax incentives and procurement preferences that prioritize U.S. and allied content. This dual approach both shields domestic producers and encourages long-term capital investment.

Price Floors and Strategic Stockpiles

Establish critical mineral reserves, modeled on uranium stockpiles and informed by the Department of Defense’s recent price-floor arrangement with MP Materials. Such mechanisms provide market stability, ensure baseline demand, and de-risk expansion for producers across the supply chain.

Robust Enforcement

Close loopholes and strictly enforce bans on adversarial imports, ensuring that material routed through third countries does not undermine U.S. policy. Federal funding and regulatory oversight must back enforcement to restore credibility and investor confidence.

Demand-Side Support

Revive and expand government-backed demand creation programs, particularly in clean energy, electric vehicles, and advanced defense platforms, not to mention drones and humanoid emerging markets. The rollback of prior green energy and EV incentives has left demand signals weakened; restoring these measures may be an essential contribution to anchor long-term industrial growth.

The Pivotal Decade

The reality is clear: without decisive industrial policy intervention, U.S. rare earth and critical mineral sectors will remain marginal players, vulnerable to foreign state-backed competitors. Yes, President Trump deserves credit as compared to previous administrations for starting to put thought, action, and money into the problem.  But much more is needed.  Our point of view at Rare Earth Exchanges--with demand surging and global geopolitics tightening, the next decade represents a narrow but vital window to move from dependency toward resilience.

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