Unpacking the US Administration's Scramble to Cut US Dependence on China's Rare-Earth Metals

Last week, the US Treasury Secretary came back from a southern state holding up a small piece of metal, proclaiming it was the first rare-earth magnet manufactured in the US in 25 years.

He remarked that this was a sign the US is breaking “Beijing's grip on our industrial pipeline.” Thanks to a new rare-earth mineral manufacturing plant in South Carolina, the official continued, “The nation is regaining its autonomy.”

Challenging Beijing's Control in Essential Minerals

Reducing Beijing's processing and manufacturing dominance in these materials, which are vital for advanced electronics, energy storage, and military equipment, is a key goal for the current US administration. Using tariffs and other strategies, the US is betting on bringing the industry back to domestic facilities.

These tariffs led Beijing to restrict rare-earth exports to the US and pushed the administration to sign deals with an ally, a partner, another nation, and Japan.

Although the US and China have now reached a temporary agreement on rare earths, Beijing—with around 70% of worldwide extraction and nearly all of international refining—has a head start that may prove challenging to diminish.

“Rare earths are used in EV engines but also in guidance systems that have obvious applications for the military,” says an industry expert. “Anything that has a strong magnet in it uses rare earths.”

No Easy Fix for US Independence

There’s no easy fix for the US to reduce its reliance on imports from China of minerals essential to defense, semiconductor production, and the shift from traditional energy to wind and solar. According to federal reports, the US brought in the vast majority of the rare earths it used in 2024.

In the case of rare-earth minerals such as a key element, essential for chip production, and another mineral, essential to military applications, China's control over processing rises to 99%. Dysprosium and terbium are found in magnets crucial to EV motors and power systems in wind turbines, along with applications for mobile devices, high-intensity lighting, and nuclear reactors.

Long-Term Efforts and International Resources

Efforts to cut the US’s reliance on Chinese production of rare-earth minerals could take years. Experts note that “These minerals” is somewhat of a misnomer because they’re not that uncommon in the earth’s crust, but many deposits, such as those in Ukraine, where a deal was signed earlier this year, are only in the initial phases of mining.

“The issue isn't scarcity per se, it’s that Beijing can limit how much is exported,” a specialist said, adding that securing permits from China can be a lengthy, difficult process.

The Arctic region, a key area of American interest, and Brazil, are two other countries with substantial rare-earth resources. Domestically, there are deposits in California, Wyoming, and Missouri, with the biggest active site operating at Mountain Pass, the state, about 60 miles from a major city.

Government Initiatives and Investment

In July, the US Department of Defense took on the role of the largest shareholder in a mining company, with plans to open a new “integrated” plant, named 10X, to produce magnets crucial for military aircraft, drones, and naval vessels.

In North America, measured and indicated resources of rare earths were calculated at 3.6m tons in the US and more than 14m tons in the northern neighbor—far less than the vast reserves believed to be in the Asian giant.

Mirroring direct investment in the steel industry and domestic technology firms, the federal agency announced it was ready to make direct investments in critical mineral companies.

“The US is up against state capital because Beijing is picking these as priority areas that they want to invest in,” a cabinet member said during a address in April.

He suggested that the US could use a sovereign wealth fund to speed production. “How could the richest nation in the world not possess the biggest sovereign wealth fund?” he asked.

Historical Obstacles and Future Outlook

American attempts to support homegrown output have floundered in the past when China cut costs, rendering unsubsidized rare-earth development uneconomic against China’s lower cost of production and far-sighted planning.

In the past, an industry leader testified before a US Senate committee that “nations that fund in battery capacity and industrial networks now are likely to dominate this industry for the foreseeable future. There is still time for the US but immediate steps are required.”

Five years on, a scramble to build trading alliances around rare earths is accelerating.

“In about a year from now, we’ll have an abundance of essential resources that you won’t know what to do with them,” a top leader told the media. That came eight months after a demand for payment in the form of minerals from another country. In September, the authorities in Asia signed a contract with an US firm, securing rights to minerals such as key metals.

Prospects for Success

But, can the US make up its shortfall and weaken China’s hold on rare-earth supply chains? “The US has taken really significant steps already,” a specialist comments. The US, he adds, cannot be “independent in the near future because it takes time to bring a mine online and establish processing plants.”