IMF Models 1.5% U.S. GDP Loss From 80% Rare Earth Supply Disruption

Highlights

• IMF working paper models an 80% rare earth supply disruption causing U.S. GDP to fall 1.5%, Japan 1.8%, and Germany 1.2%
• China's control of rare earth processing creates economic vulnerabilities far exceeding the minerals' modest market value
• Selective export licensing of dysprosium or terbium could impose disproportionate industrial costs while preserving Chinese revenues
• Defense and aerospace sectors face qualification barriers that standard substitution models may underestimate
• REEx warns the IMF baseline is not a ceiling on losses nor a probability-weighted geopolitical forecast