Highlights
- China controls 90% of rare earth element processing and has halved exports, potentially paralyzing US electric vehicle and industrial manufacturing.
- US lacks midstream processing and magnet manufacturing capabilities, creating a critical vulnerability in the REE supply chain.
- Urgent national strategy needed, including Defense Production Act deployments, domestic processing facilities, and comprehensive industrial and educational initiatives.
The lifeblood of modern electric vehicles, rare earth elements (REEs), are vanishing from U.S. supply chains at an alarming pace. As reported by Steven Symes for The Auto Wire, China’s rare earth exports to the United States plunged by 92% in May 2025 compared to the previous year, effectively kneecapping the American auto industry’s electrification ambitions.
Perhaps now we know why President Donald Trump had his commerce negotiations team chasing the Chinese from Switzerland to London!
Symes warns that manufacturers like Ford are already idling production lines, with parts inventories reduced to a “day-to-day” level of survival. This crisis echoes the pandemic-era chip shortage—but with more profound implications for energy, defense, and industrial sovereignty.
What’s Happening? How About China’s Quiet Weaponization of Supply
China controls about 90% of downstream REE processing, and since April, it has halved exports twice, leaving global supply at just 25% of normal volume. Symes rightly calls this a show of power. The U.S. last saw comparable export contraction from China in February 2020 and 2015—both moments of geopolitical tension suggest Rare Earth Exchanges (REEx).
REEx Review
Symes underscores the urgency for a domestic supply chain and the risk of U.S. industrial paralysis. But the piece stops short of identifying, first and foremost, the underlying forces behind all of this. Why does China dominate in this sector? It’s the result of three decades of state-driven industrial policy, which includes subsidies, environmental trade-offs, and forced technology transfers.
And where do U.S. gaps persist? Of course, as Rare Earth Exchanges (REEx) often accounts, this is not just about mining. The bottleneck is in midstream processing and magnet manufacturing, where the U.S. has virtually no capacity. Of course, there are some bright spots, such as MP Materials and several other initiatives, but far more will be necessary.
And then there’s the false hope of diplomacy. Symes notes that after a call with President Xi, President Trump claimed the crisis was “fixed.” But export flow remains throttled. This is not a supply glitch—it’s strategic leverage. And Trump, of course, is motivated by politics to declare quick wins. No, there are no quick wins to be had here. POTUS—industrial policy will be necessary, and unfortunately, this will not help him during mid-terms.
Rare Earth Exchanges™ Bias Meter™
| Source | Bias Rating | Justification |
|---|---|---|
| The Auto Wire | Reactive Alarmism | Highlights the crisis impact well, but omits systemic drivers or policy remedies |
| Original Analysis | Strategic Realism | We add context: China’s control is deliberate, durable, and weaponized. |
| Trump-Xi Narrative | Political Spin Alert | Claims of resolution lack substance; real supply volumes tell a different story. |
What Needs to Happen Now
The U.S. doesn’t just need mines. As REEx continues to reiterate, it (in conjunction with a network of democratic and market-oriented nations) requires Title III Defense Production Act deployments, offtake-backed processing facilities, and a national REE-to-magnet industrial base, along with complementary educational programs spanning the spectrum from elementary to higher education. Automakers must hedge by securing long-term domestic contracts, rather than relying on goodwill from China.
REEx urges stakeholders—OEMs, policymakers, and investors—to stop reacting and start building. Unless China’s ready to open up and let companies and investors from around the world come in and invest (and that’s not likely), the road to EV dominance doesn’t run through Shanghai.
Need insight into how we can break this monopoly? Contact us.
Leave a Reply