Highlights

• Treasury Secretary Scott Bessent reveals China's withholding of rare earth exports, signaling a potential escalation of economic and geopolitical tensions.
• Rare earth elements emerge as a strategic leverage point, controlling 90% of global refining and impacting the semiconductor and defense industries.
• The U.S. seeks to "derisk" dependency on China through trade restrictions, supply chain reshoring, and resource diplomacy.

---

In a wide-ranging CBS (opens in a new tab)"Face the Nation" (opens in a new tab) interview on national television, U.S. Treasury Secretary Janet Yellen laid out the Biden administration’s evolving stance on China, revealing rare earth elements as a central—and increasingly contentious—flashpoint in the escalating economic and geopolitical rivalry between Washington and Beijing.

Rare Earths and China’s Leverage

Bessent confirmed that China is withholding critical mineral exports, including rare earth elements, despite a recent agreement negotiated in Geneva. He characterized this move as either a “glitch in the system” or potentially a calculated breach of trust, echoing President Trump’s assertion that China had violated its commitments. “We’re trying to derisk, not decouple,” Bessent said, highlighting U.S. efforts to reduce dependency on China for key industrial inputs such as semiconductors, medicines, and rare earths.

Rare Earth Exchanges notes that this stance reflects the broader reality that China controls roughly 90% of global rare earth refining and continues to assert its position by using export restrictions as a tool of statecraft. The inconsistency between official trade frameworks and real-time actions exposes the fragility of U.S.–China resource diplomacy.

Taiwan, Trade, and the Strategic Overlap

The interview revealed a troubling contradiction: while Bessent claimed the U.S. is not seeking to escalate tensions, he acknowledged the Defense Secretary’s recent warning of an “imminent military threat from China to Taiwan”, and simultaneous U.S. moves to revoke student visas and expand export controls. This raises questions about whether Washington’s posture toward Beijing is coordinated or reactionary.

Importantly, rare earths occupy a unique space in this conflict. Taiwan is a significant hub for global semiconductor production, and rare earths are essential for both chip manufacturing equipment and the defense systems that protect the island. The intersection of mineral supply chains, tech infrastructure, and security guarantees makes Taiwan not just a military risk, but a strategic materials bottleneck.

Conflicting Views on Chinese Resilience

JPMorgan CEO Jamie Dimon’s (opens in a new tab) recent comments also surfaced, as he warned that China “won’t bow” to U.S. pressure and has “put 100,000 engineers” on national challenges. Bessent pushed back strongly, claiming that the “laws of economics and gravity” still apply to the Chinese economy. This divergence in views between Wall Street and the Treasury underscores a key split: investors may be underestimating the structural capacity of the Chinese state to absorb pressure and reorient its industrial base, including rare earth innovation.

Tariff Economics: Contradictions and Confusion

On the domestic front, Bessent faced skepticism over the impact of tariffs, especially after the administration doubled steel and aluminum tariffs and maintained a 30% rate on imports from China. While he claimed American consumers have not seen inflation, citing falling energy and food prices, he also downplayed warnings from Walmart, Best Buy, and other retailers about back-to-school price hikes driven by tariff costs on goods like clothing and sneakers.

This inconsistency raises concern: tariffs may temporarily benefit politically sensitive industries, such as steel, but they also risk inflation and inventory disruptions in retail, particularly as rare earth-based components ripple through the supply chain. Walmart’s sub-3% margin makes it especially vulnerable to cost spikes, contradicting Bessent’s dismissal of retail warnings.

Strategic Minerals at the Center of a Broader Realignment

As Washington and Beijing navigate stalled diplomacy, strategic decoupling, and tariff skirmishes, rare earths remain a linchpin in the unfolding U.S.–China contest. While the Biden-era rhetoric warned of overdependence, the Trump administration is now operationalizing de-risking through trade restrictions, supply chain reshoring, and resource diplomacy.

Rare Earth Exchanges urges investors and policy observers to track developments at the intersection of rare earth policy, Taiwan security, and global trade disruptions. The current posture from U.S. leadership appears reactive and at times contradictory—exposing both opportunity and risk across the critical minerals value chain.

Source: CBS News Interview with Treasury Secretary Scott Bessent, May 26, 2025