Highlights

• The U.S. faces a critical challenge in rare earth minerals, with China controlling nearly the entire global supply chain and strategic manufacturing capabilities.
• Current U.S. policy relies on fragmented, market-driven approaches that are ineffective against China's coordinated, state-backed rare earth strategy.
• To compete globally, America must develop a comprehensive national strategy involving massive infrastructure investment, cross-agency coordination, and full supply chain development.

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Under President Donald Trump's new administration, key figures within the Departments of the Interior, Defense, and Energy are expected to oversee rare earth elements and critical minerals. While specific appointments have yet to be officially announced, these departments traditionally play pivotal roles in managing and securing the nation's critical mineral resources.

Historically, the Department of the Interior has been instrumental in identifying and managing critical mineral resources. In 2020, under President Trump's previous term, an executive order was issued declaring a national emergency in the mining industry to boost domestic production of rare earth minerals, aiming to reduce dependence on foreign adversaries, particularly China.

Of course, this edict missed the mark. The problem is far deeper and more profound than access to the underlying raw commodity as Rare Earth Exchanges continues to elucidate. See the executive order (opens in a new tab).

The Department of Defense has also been actively involved, providing funding to companies like MP Materials to enhance domestic production and processing capabilities of rare earth elements, which are vital for military technologies.  The agency, of course, issued the rule that by January 1, 2027, no Chinese magnets can be used by the U.S. defense sector.  See the link (opens in a new tab).

The Department of Energy contributes by supporting research and development initiatives to diversify supply chains and develop alternatives to rare earth elements. As the administration finalizes its appointments, the individuals leading these departments will be central to shaping policies and strategies concerning rare earth elements and critical minerals. Their leadership will influence efforts to bolster domestic production, secure supply chains, and reduce reliance on foreign sources.

The Rare Earth Reckoning: Why U.S. Policy Is Ill-Equipped to Rival China's Domination

The United States faces a daunting challenge in its attempt to counter China's near-total control of the REE supply chain, a foundational component of modern technology and future global power structures. Despite bipartisan recognition of the problem, the federal government’s fractured approach and misplaced faith in market dynamics leave the U.S. woefully unprepared to compete with China’s vertically integrated, state-coordinated REE juggernaut.

Like its predecessors, the Trump administration confronts a critical dilemma: no incremental or piecemeal strategy will suffice to address a problem that requires an entirely new paradigm of industrial policy and national strategy.

Unlike the U.S., where responsibility for rare earths is fragmented across multiple agencies—the Department of Defense, Department of Energy,

Department of the Interior, and others—China has orchestrated a synchronized approach that encompasses everything from mining and refining to manufacturing value-added products like permanent magnets, electric vehicles, and high-tech components. This deeply integrated structure is no accident; it is the result of deliberate, long-term planning to dominate not just the raw materials market but the downstream industries that rely on REEs. Beijing views rare earths not as a commodity but as a strategic weapon to secure economic, technological, and geopolitical supremacy.

The U.S., in contrast, approaches the issue from a fundamentally flawed perspective, viewing rare earths as a problem for the free market to solve. This belief is profoundly misguided. Rare earths are not traded in a free market; the sector is distorted by Chinese state subsidies, price manipulation, and export controls that aim to maintain global dominance.

The Chinese model demonstrates that monopolistic control is not an unfortunate byproduct of their system—it is the goal. By ensuring that every stage of the supply chain is controlled domestically, China has made itself indispensable to global high-tech manufacturing, a position it is now leveraging to move into higher-value industries like electric vehicles (BYD) and advanced semiconductors to countless other inputs for high-end products.

The implications of this dominance extend beyond technology. China’s ability to monopolize critical materials positions it to lead the global energy transition, outcompete Western economies in advanced manufacturing, and ultimately, shape the next generation of financial and economic systems, including the potential establishment of a digital yuan as the global reserve currency by 2049, per Rare Earth Exchanges’ translation of various edicts in China.

This vision underscores the stakes of the rare earth battle, yet the U.S. response remains reactive, myopic, and grossly underfunded. Initiatives like securing Greenland’s mineral resources, while symbolically significant, fail to address the core issue: the U.S. lacks the capacity to separate, refine, and process rare earths at scale, let alone manufacture the value-added products necessary to compete globally.  America is currently at least a decade behind, if not more.

What the Answer?

What is needed is a total reset of America’s approach to rare earths, one that abandons the illusion of market solutions in favor of a comprehensive, government-led strategy. This would include establishing a national rare earth strategy office to coordinate efforts across agencies, investing hundreds of billions in mining, refining, and processing infrastructure, and partnering with allies to create alternative supply chains.  This can be accomplished with a network of allies, but the complexity, of course, would rise with such an approach.

Moreover, the U.S. must recognize that simply extracting raw materials is insufficient. To counter China’s dominance, America must develop its own capacity to produce magnets, batteries, and other critical components, ensuring that the entire supply chain—not just its inputs—remains competitive.

Despite its focus on “America First” industrial policies, the Trump administration has shown no clear clue about tackling this challenge at the required scale. The risk of failure is monumental. Without a unified strategy and transformative investment, the U.S. will continue to cede ground to China, jeopardizing its economic security, military readiness, and leadership in the industries that will define the 21st century.

The time for incrementalism has passed. Only bold, coordinated action can pull the U.S. back from the brink of rare earth irrelevance. Otherwise, a plan B of acquiescence and the embrace of a rising BRIC will likely become a reality sooner rather than later.