Rare earth elements might sound like something out of a sci-fi film, but they’ve become the latest weapon in the escalating US-China trade war. Following President Trump’s tariff escalations, China has imposed strict export licensing rules on seven critical rare earth elements. With China controlling 69% of global rare earth metals production, its decision to stop shipments has put the American defense and tech industries in a challenging position.

Rare earths, real stakes: America’s domestic production capacity has remained inadequate compared to China’s dominance, even before the recent ban exposed it. In 2020, the Department of Defense committed over $439M to build domestic supply chains, but developing mining and processing capabilities requires years of investment. Defense Metals Corp’s Luisa Moreno noted that it could take “five to 10 years in the best-case scenario” for the US to produce its own heavy rare earths. CSIS’ Gracelin Baskaran believes the US had years to act, but its delay in taking action has only strengthened China’s position at the negotiating table. With China holding the cards, American companies must brace for prolonged supply challenges and potentially massive price increases across consumer technologies.

• China controls nearly 100% of global heavy rare earth processing, with the US producing less than 1% of the world’s supply — leaving the country “vulnerable,” as these materials are crucial for jets, submarines, and missile systems.
• The Pentagon and US defense contractors have limited stockpiles, which could be exhausted in months instead of years, with each F-35 fighter jet containing ~900 pounds of rare earth materials and some submarines requiring over 9.2K pounds.

The Scramble for Alternatives

Some US-based miners are striking golden opportunities, thanks to the geopolitical tensions. President Trump’s recent announcement of an executive order to expand domestic production of critical minerals has ignited a rally across the sector, with NioCorp DevelopmentsNB

soaring 71% and MP MaterialsMP

jumping 38% as of 2025. This strategic pivot aims to reduce the US’ dependence on foreign rare earth supplies crucial for American industries.

• MP Materials, which runs the only active rare earth mine in the US, is scaling rare earth oxide production and building a magnet plant in Texas, set to begin by late 2025.
• Additionally, USA Rare EarthUSAR
  has successfully produced 99.1% pure dysprosium oxide in Texas, a rare earth metal essential for EVs and defense tech.

The cost of inaction: Trump’s rare earth initiative follows an Oval Office meeting with Ukrainian President Volodymyr Zelensky that ended without a highly anticipated minerals deal. The US had proposed receiving $500B in profits from Ukraine’s rare earths, with total mineral wealth estimated at $10T to $12T. However, energy analyst Gaurav Sharma warned these figures may be inflated, noting that 35% to 40% of Ukraine’s rare earths are under Russian occupation. As NioCorp’s Elk Creek project progresses and USA Rare Earth builds out its full supply chain from mine to magnet, American companies are positioned to capitalize on the growing demand. Still, CSIS cautioned that “developing mining and processing capabilities requires a long-term effort, meaning the United States will be on the back foot for the foreseeable future.”