Highlights

• China's suspension of rare earth magnet and alloy exports is creating a global crisis for automakers, defense contractors, and national governments.
• The US lacks a vertically integrated infrastructure to compete with China's rare earth mineral monopoly, requiring an estimated $100 billion investment for supply chain independence.
• Immediate action is needed through a National REE Sovereignty Act to address critical mineral production, processing, and strategic independence.

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A Reuters (opens in a new tab) report out today confirms what Rare Earth Exchanges (REEx) has long warned: China is leveraging its monopoly over rare earth elements (REEs) and critical minerals to rattle global supply chains and gain leverage in the escalating trade war with the United States. What was once a strategic vulnerability discussed in classified briefings is now a boardroom-level crisis for automakers, defense contractors, and national governments alike.

The report highlights growing fears across Europe, Asia, and North America as China’s April suspension of rare earth magnet and alloy exports takes hold. German automakers joined Indian electric vehicle producers and U.S. manufacturers in warning of imminent production halts if shipments don’t resume soon. Key components—from motors and alternators to seat belts and steering systems—are now at risk, confirming REEx’s position that REE dependence has reached a critical tipping point.

Crisis Just Starting

Reuters accurately describes how the halt in exports, compounded by China's drafting of a new licensing regime, has frozen shipments at ports and placed even military contractors in jeopardy. U.S. diplomats, Japanese trade envoys, and Indian industrial representatives are scrambling for emergency meetings in Beijing. Meanwhile, President Trump is expected to confront Chinese President Xi Jinping directly over the breach of the Geneva trade agreement.

However, while Reuters correctly captures the geopolitical urgency, it understates one hard truth: there is no quick fix. As former State Department official Frank Fannon rightly notes, the U.S. has a domestic production problem.

But REEx goes further—we have a processing, permitting, and financing problem as well.

REEx has consistently advocated for an American industrial policy tailored to critical minerals. Unfortunately, the political system remains resistant to the scale of investment required or to a more in-depth industrial policy regimen. Estimates suggest that full supply chain independence—including mining, separation, magnet production, and recycling—may cost upwards of $100 billion if the U.S. were to be completely cut off from Chinese products upstream, midstream, and downstream. Yet policymakers still treat it like a venture capital pitch.

Responses Start, but Not Enough

While Reuters emphasizes Trump’s defensive actions—tariffs, Section 232 investigations, and fast-tracked permitting—the truth is that the U.S. lacks the vertically integrated infrastructure needed to compete. Greenland and Ukraine, often floated as solutions, are years away. Domestic mines, such as MPMaterials and NioCorp, help, but without local magnet production, America shifts from one choke point to another.

REEx reiterates its call for a National REE Sovereignty Act, including public-private partnerships, downstream demand guarantees, and a permanent stockpile system. The time for half-measures has passed. It’s time to get serious. 

The world is watching—and now, thanks to China’s hardball tactics, so is Wall Street.