Trump Administration Eyes Defense Production Act to Supercharge Rare Earth Independence

Highlights

• Trump administration exploring Defense Production Act to fund rare earth element mining and processing projects
• Goal is to reduce U.S. dependence on China for critical minerals used in defense and technology sectors
• Strategic move aims to rebuild domestic REE supply chains
• Protect national economic and military interests

In a potentially seismic shift for U.S. industrial policy, the Trump administration is reportedly weighing the use of the Defense Production Act (DPA)—a Cold War-era authority—to directly fund and fast-track rare earth element (REE) mining, processing, and downstream technology projects.

According to a Bloomberg report published today (opens in a new tab), senior officials are exploring the DPA’s full arsenal of tools: loans, grants, government procurement contracts, and strategic financing mechanisms. While no final decisions or timelines have been announced, sources indicate that the intention is to reduce America's reliance on China for critical minerals that power everything from fighter jets to electric vehicles.

This move comes amid intensifying economic pressure. China recently tightened export restrictions on dysprosium and terbium—two heavy rare earths vital for defense—and secured new production footholds in Myanmar via militia-protected operations. The U.S., despite owning domestic ore (e.g., at Mountain Pass), still lacks key refining and separation infrastructure, leaving national security exposed.

If enacted, the DPA approach would represent the first significant use of centralized industrial authority to rebuild REE supply chains since the end of the Cold War. Rare Earth Exchanges (REEx) has, since our inception last October, called for such action, including DPA-backed capital, permitting reform, and vertically integrated REE hubs, as market-driven solutions have repeatedly failed to close the refining gap.

Critics may see this as another Trump power play. Still, the strategic calculus is clear: America cannot secure its economic or military future while relying on an adversary to process the minerals that make modern power possible.  In this case, the power move is likely justified! An industrial policy is also of paramount importance.

The clock is ticking. China's leverage is real. This time, Washington must do more than announce—it must act.

Source: Joe Deaux, Jenny Leonard, and Jennifer A. Dlouhy. “Trump Mulls Using Defense Powers to Fund Rare-Earth Projects,” Bloomberg, June