China’s Rare Earths Leverage & U.S. Dependency

China’s Rare Earths Leverage: The U.S. Dependency Challenge

2 min read

The rivalry between the United States and China has taken a distinct twist with rare-earth minerals. China’s dominance in this sector is increasingly being used as a strategic lever, while the U.S. remains heavily dependent on Chinese supply chains for these critical materials.

China’s Rare-Earths Dominance and Strategic Move

China produces and refines the overwhelming majority of rare earth elements (REEs) used in everything from electric vehicles and wind turbines to advanced weapons systems. According to industry observers, China controls about 90 % of refined rare earth capacity globally.

In response to U.S. tariffs and trade pressures, China has recently placed tighter export controls on key rare earths and magnets. These controls include export licences and restrictions on materials crucial for high-tech manufacturing and defence. Analysts label this a “pain point” for the U.S., especially given the former administration’s focus on tariffs and manufacturing.

Why the U.S. Needs China’s Rare Earths

For the U.S., rare earths are not optional — they are essential. Technologies such as stealth aircraft, missiles, robotics, and renewable-energy systems all require REEs and associated magnets and alloys. Experts warn that being reliant on external — and potentially coercive — supply chains poses serious national-security and industrial risks.

However, while the U.S. has pledged to reduce its reliance and boost domestic production, implementation remains challenging. Regulatory hurdles, environmental costs, and decades of under-investment mean alternatives are slow to scale.

Strategic Implications

The convergence of trade policy, manufacturing, geopolitics and raw-material supply chains means that rare-earths are now part of the “great power” competition. China’s ability to restrict or condition exports gives it leverage that the U.S. and its allies must reckon with. On the U.S. side, decoupling from Chinese supplies or building parallel supply chains will require significant investment and time.