Xi’s Strategic Message in 2019
In 2019, during the early stages of Donald Trump’s trade war with China, Chinese President Xi Jinping visited a factory in Ganzhou, a major rare earth production hub in southeastern China. While examining blocks of gray metal, he called rare earths a “vital strategic resource,” sending a strong signal to the world.
Rare Earths: A Unique Advantage
Rare earth elements, 17 in total, are essential for producing modern technologies—smartphones, electric vehicles, medical devices, and military equipment like fighter jets and submarines. Although found globally, they are hard to extract and process, giving China an edge due to its infrastructure, investment, and lax environmental rules. As of now, China mines 61% and processes 92% of the world’s rare earths.
Export Restrictions Hit Back at Tariffs
On April 4, 2025, China restricted exports of seven rare earths and their alloys/magnets. Exporters must now get approval from Beijing, a direct response to Trump’s 34% tariffs on Chinese goods. This move hits the U.S. where it hurts—its tech and defense industries.
Impact on the Ground
The effects were immediate. Several U.S. and European companies had their shipments halted in China. Many didn’t anticipate the regulation, and confusion over paperwork caused further delays. Experts say this is a calculated, high-impact move by China.
Heavy Rare Earths Are Key
China controls nearly all of the global supply of “heavy” rare earths—harder to find and more valuable. Their export is now tightly regulated, which threatens American production of sensitive technologies. These minerals are used in F-35 jets, submarines, and electric motors.
America’s Weak Supply Chain
While the U.S. has rare earth resources, it lacks processing infrastructure. Years ago, American companies left the industry as cheaper Chinese options emerged. Now, the U.S. is playing catch-up, trying to rebuild the lost capability.
Defense and Industry Push
The Pentagon has invested $439 million since 2020 to develop a domestic supply chain. Companies like Phoenix Tailings in Massachusetts are working on eco-friendly refining methods. USA Rare Earth is building a magnet plant in Texas, but even they admit processing remains a bottleneck.
Urgency to Respond
Industry leaders say the U.S. has the resources but lacks speed. China’s restrictions may finally push America to invest, innovate, and secure its future in critical minerals—before it’s too late.