Highlights

• China's rare earth export controls could accelerate global investment in alternative supply chains and mining projects.
• Short-term supply shocks remain significant, especially for defense and aerospace industries with limited REE substitution options.
• Current global rare earth resilience is incomplete, with full independence several years away from comprehensive implementation.

Rare Earth Exchanges reviewed an April 27th Times of India (opens in a new tab) article by Tannmay Kumarr Baid and Pranay Kotasthane of the Takshashila Institution, who argue that China's rare earth export controls are a self-defeating maneuver. The authors’ key points are well-taken: China’s rare earth monopoly is based more on economic dumping than unique technological capabilities—or so the authors believe.  U.S. dependence on rare earth imports by value remains modest, and accelerated global diversification through substitution, recycling, and new refining projects is already underway. They correctly highlight how China’s restrictions will likely drive permanent new investment outside its borders, weakening its strategic leverage over time.

However, the analysis overlooks short-term and immediate realities. While substitution and recycling efforts are growing, these solutions are not yet scaled enough to meet the heavy rare earth needs of defense, aerospace, and advanced industrial sectors in 2025–2028.  Rare Earth Exchanges suggests that full-scale REE resilience for the United States is several years away, barring some jolting, massive intervention, which could likely be compressed to a few years if the Trump administration adopted industrial policy.

Tesla and Toyota may innovate away from certain REE dependencies, but military platforms like the F-47 fighter and hypersonic systems have no immediate substitutes for dysprosium-stabilized magnets. Furthermore, mining, permitting, and building solvent extraction plants remain multi-year endeavors, even under the best conditions. In short, while China’s embargo may weaken its dominance over the long arc, it still poses severe short-term supply shocks for critical sectors — a nuance policymakers must not ignore.

The analysts also underestimate the scale, technological prowess, and process refinement the Chinese have accomplished at their key rare earth complex in Inner Mongolia, for example.