China’s exploitation of its monopoly over rare earth elements has become a major sticking point in high-stakes trade talks with President Trump – and experts warn the US needs to prepare for the worst.
Beijing has infuriated Trump officials by failing to loosen its crackdown on exports of seven “heavy” rare earth metals which are essential for gadgets like smartphones and electric cars as well as military hardware like F-35 fighter jets and drones.
On Friday, Trump fumed that China had “totally violated” the terms of a preliminary trade agreement struck in Geneva, which included a 90-day tariff truce that runs until mid-August. Trump didn’t elaborate, but US Trade Representative Jamieson Greer said one concern was that China “continues to, you know, slow down and choke off” the flow of critical minerals to the US.
Treasury Secretary Scott Bessent on Sunday said Trump and Chinese President Xi Jinping will speak soon to iron out the trade issues including the dispute over critical minerals.
“What China is doing is they are holding back products that are essential for the industrial supply chains of India, of Europe. And that is not what a reliable partner does,” Bessent said in an interview with CBS’ “Face the Nation.”
“They are withholding some of the products that they agreed to release during our agreement — maybe it’s a glitch in the Chinese system, maybe it’s intentional. We’ll see after the President speaks with the party chairman.”
Nonetheless, any talk from China of a trade truce is “little more than window dressing,” according to longtime mining executive Mark A. Smith, whose firm NioCorp has a rare earths facility under development in Nebraska.
“China is strategically choosing minerals for export restrictions that have a disproportionate impact on our military readiness and national defense,” Smith said. “They hold virtually all of the cards.”
Since 2023, China has implemented export controls on at least 16 critical minerals as part of what DC insiders and other experts describe as a highly targeted campaign aimed at disrupting US defense and tech supply chains.
In the case of the seven heavy rare earth metals most recently targeted with new licensing rules, China controls as much as 99% of global processing capacity. In turn, the Trump administration has irritated China by imposing ever-tighter export controls on US-made computer chips needed in artificial intelligence.
Trump’s proposed takeover of resource-rich Greenland is widely seen as part of his strategy to curtail the country’s reliance on China. Elsewhere, the US recently struck terms on a mineral rights deal with Ukraine, even as talks to end the war with Russia have floundered.
Mineral sites in Greenland and Ukraine, however, are many years away from making a dent in US demand. Experts said they are best seen as part of a broader strategy that includes increased domestic mining, as well as close collaboration with resource-rich allies to decrease reliance on China.
“It’s a reliability of access problem,” one House aide briefed on the situation told The Post. “As we stand right now, I think we’re very underprepared and you can’t buy processing capacity off the shelf.”
The risk of a total embargo in response to rising geopolitical tensions may seem far-fetched, but it has a precedent. In 2010, China briefly sparked chaos when it halted shipments of rare earth elements to Japan while the two countries were locked in a territorial dispute.
Some insiders believe that China would inevitably resort to similar tactics in the event of a more serious diplomatic dispute with the US – such as a potential invasion of Taiwan.
Congress needs to “anticipate the worst,” according to Rep. Don Bacon (R-Neb.), a retired Air Force officer and a member of the House Armed Services Committee.
“After 30 years in the military, I found that we tend to exaggerate the enemy’s capabilities, but we tend underestimate their intentions,” Bacon said in an interview. “And I think if this is an option for China and we’re playing hardball, oh, yeah, they can shut this stuff down if they wanted. That’s why it’s very important that we find alternative areas.”
A White House official said Trump is taking corrective action after former President Joe Biden “deprioritized domestic mining and delayed permitting for years in favor of ‘green’ energy projects.”
“In President Trump’s first 100 days, he has taken bold, decisive steps to reverse course,” the official said. “He signed Executive Order 14241 to ramp up American mineral production, launched a National Critical Minerals Strategy, fast-tracked permitting for key projects, and initiated a Section 232 investigation into Chinese mineral imports.”
“The administration is also pursuing new market mechanisms, export controls on mineral recycling, and a fund to accelerate US dominance in this vital sector,” the White House official added.
The Center for Strategic and International Studies warned in a recent report the US military was “particularly vulnerable” to any disruption to shipments of heavy rare earths.
First announced in April, China’s licensing requirements on rare earth magnets left Western firms scrambling to restock before their dwindling stockpiles ran out. The broad shift toward “just-in-time” supply chains over the last few decades means many companies retain just three-to-six months’ worth of critical minerals.
Not even Elon Musk, who has cultivated close ties to both Beijing and Trump while leading Tesla, is immune from the negative effects. During Tesla’s April 22 earnings call, Musk admitted that China’s export controls on rare earth magnets could delay production of the company’s Optimus humanoid robot.
Metals traders and other executives across various industries are already “very, very concerned” and have begun sounding the alarm on Capitol Hill about how problematic a long-term shutdown would be for the economy, the House aide said.
“In the emails that we get about the potential impact of a sustained and meaningful rare earth control on the US market, the response is pretty frantic,” the House aide said.
Some legislative efforts are underway in Congress to address the budding crisis. Rep. Rob Wittman (R-Va.), who leads the House Select Committee on China’s Critical Minerals Policy Working Group, has backed a trio of bills aimed at fixing the US supply chain and fighting back against China’s attempts to leverage its monopoly.
As The Post has reported, industry officials have also called on the US government to ease burdensome regulations and environmental permitting processes that have chilled investment in rare earth mining and caused major delays for existing projects.
