Why It’s Nearly Impossible for America to Meet Its Rare-Earth Needs After China’s Export Restrictions

In a strategic geopolitical maneuver, China has implemented restrictions on the export of seven crucial rare-earth elements, significantly impacting the U.S. and highlighting America’s vulnerability in this critical sector. As tensions escalate over trade policies, U.S. researchers warn that America’s inaction on rare earths has placed China in a formidable position at the negotiating table.

China’s Export Restrictions: Background and Implications

Recently, China announced “export control measures” on rare earth elements including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These elements are vital for a multitude of advanced technologies, including smartphones, electric vehicles, and military equipment. According to Luisa Moreno, president of Defense Metals Corp, the U.S. is woefully underprepared to meet its own needs for these materials. Notably, American production capabilities for these rare earths are virtually nonexistent.

Gracelin Baskaran, research director at the Center for Strategic and International Studies (CSIS), stressed that China processes nearly 100% of these heavy rare earths, placing the U.S. in a precarious position where alternatives are scarce. Even if the U.S. were to explore other sourcing options, the challenges associated with “heavy” rare earths, which are more difficult to extract and refine, compound the issue.

The Timing of China’s Export Controls

The recent implementation of export restrictions coincides with the U.S. government’s efforts to bolster its own production capabilities of critical minerals, particularly following the Trump administration’s executive order designed to enhance national security. However, these restrictions do not constitute a total ban; rather, they indicate a process involving non-automatic licensing. This means that exporters will need to apply for licenses to export these goods, leading to initial supply disruptions as shipments remain in limbo at Chinese ports.

Consequences for the U.S. Defense Sector

Rare earths are particularly critical for military applications. For instance, the F-35 fighter jet requires over 900 pounds of rare-earth elements, with Arleigh Burke-class destroyers and Virginia-class submarines needing even more. Experts warn that the restrictions will exacerbate an already strained U.S. defense sector that struggles with limited production capacity.

Baskaran highlighted the implications of relying on small stockpiles of rare earths, which cannot sustain long-term military needs, ultimately favoring China’s military advancements over the U.S.’s capabilities. Furthermore, recent developments, such as China’s ban on exporting technologies for making rare-earth magnets, have raised alarms about the U.S.’s long-term strategic position.

The Technical and Logistical Challenges

The situation for the U.S. is complicated not only by production challenges but also by a lack of technical know-how in processing rare earths. According to Baskaran, America has not mastered certain extraction technologies, thus facing substantial hurdles as it looks to build domestic supply capabilities. Currently, the Mountain Pass Rare Earth Mine, owned by MP Materials Corp., stands as the only active mining and processing facility in the U.S., contributing less than 1% of the global supply of rare earths.

Anticipating Future Needs

Looking ahead, the timeline for the U.S. to establish independent production of heavy rare earths ranges from five to ten years, according to Moreno. She emphasizes the need for ongoing investment in rare-earth exploration and production and cooperation with firms in other countries, such as Lynas Rare Earths Ltd. from Australia.

Impact on the Economy and Consumer Products

As restrictions from China take hold, consumers are likely to see increased prices for consumer products that rely on rare earths, including electric vehicles and medical technologies. Since the U.S. primarily consumes these materials indirectly, the impact will predominantly manifest through tariffs on imported Chinese goods. Consequently, increased spending in the defense sector to secure these materials may limit funding for other essential public services.

Conclusion: A Call for Action

The current scenario underscores the urgency for the U.S. to reassess its rare earth strategy in light of China’s dominance in the sector. Experts agree that delaying action only grants China greater leverage in future negotiations. The complexity of reestablishing a domestic supply chain for rare earths illustrates the need for a collaborative and aggressive stance moving forward. In this game of geopolitical chess, the stakes are high, and the time for decisive action is now.