Highlights

• China leverages its rare earth element dominance as geopolitical leverage against U.S. trade tensions.
• The U.S. struggles to reshore critical mineral supply chains due to processing complexity and industrial limitations.
• Potential rare earth supply disruptions could force long-overdue transformation in American industrial strategy.

As the U.S.-China trade war intensifies, rare earth elements have emerged as a central point of geopolitical leverage. In response to escalating tariffs from President Donald Trump, China imposed new export controls on several key rare earths—materials essential to U.S. industries ranging from defense to clean tech. While China stopped short of a full ban and omitted some of the most strategically valuable elements like neodymium, the move signals Beijing’s willingness to weaponize its dominance in the rare earth supply chain. Experts warn that although these restrictions may cause only a temporary slowdown, the data China collects through the new licensing regime could eventually be used to target U.S. defense contractors and tech firms more precisely.

The Biden and Trump administrations have both acknowledged America’s vulnerability and called for reshoring critical mineral supply chains, but progress has been slow. Processing rare earths is capital-intensive and environmentally complex, and the U.S. currently lacks the industrial base and technical workforce to compete with China’s decades-long head start.

While some see opportunity in Greenland or even lunar mining, experts argue that domestic development could take 8–10 years to scale—too long to shield American companies from short-term shocks. If Trump’s tariff war accelerates, rare earths may become both a choke point and a catalyst for long-overdue industrial transformation.