As tensions between Washington and Beijing intensify, the United States is facing a new challenge beyond the reciprocal tariffs dominating headlines – its lack of rare earth elements.

China's decision to restrict exports of key rare earth minerals to the US has recently exposed a critical weakness in the US high-tech and defence sectors, Britain’s national broadcaster the BBC reports.

Though not particularly scarce in nature, rare earth elements are indispensable to the manufacture of many modern technologies. Their global supply, however, is overwhelmingly controlled by China, and with Beijing failing to see eye-to-eye with Washington right now, any disruption in supply is proving highly consequential.

Rare earths – what are they?

Rare earths comprise a group of chemically similar elements vital to a range of advanced technologies. As of early 2025, just 17 elements are classified as rare earths. While these elements are relatively abundant in nature, extracting and refining them into usable forms is extremely difficult and at times can be hazardous to the environment.

As reported by the BBC, Neodymium, one of the most commercially important, is used in the powerful magnets found in loudspeakers, computer hard drives, electric vehicle motors and jet engines. Other elements such as yttrium and europium are used in everyday screens found in televisions and computers because of their colouring capabilities.

These materials are also essential in the medical field, powering tools such as MRI scanners and surgical lasers, as well as in key military equipment including precision-guided missiles, radars, and stealth aircraft, the report continues.

A Chinese monopoly

Effective April 2025, China is the global leader in both the mining and refining stages of the rare earth supply chain. The International Energy Agency (IEA) estimates that China produces an estimated 61% of the world’s rare earth elements. The country also processes 92% of all rare earths the BBC continues. Refining often produces radioactive waste, however, thus the limited capabilities in this sector and general reluctance to process rare earths elsewhere.

As a result of these environmental challenges many countries have opted not to develop their own facilities.

China’s dominance in this sector has been building since the early 1990s, and has benefitted from lower labour and environmental costs which in turn has enabled Chinese firms to outcompete international producers, eventually consolidating control across the entire value chain, from mining to manufacturing.

Exports – and just why the US needs China

In April 2025, Beijing introduced new restrictions on the export of seven rare earth minerals, most of which fall into the “heavy” rare earth category the BBC reports. These are less common and more complex to process, making them particularly valuable. They also have key military applications.

Under the new rules, companies must apply for special licences to export these materials, a mechanism that China is permitted to enforce under international rules governing dual-use items – goods that have both civilian and military uses.

As such, the US is especially vulnerable to such restrictions, as it currently lacks the capacity to process heavy rare earths at home. Because of this, from 2020 to 2023, approximately 70% of US rare earth imports came from China.

Worrying for Washington at the moment though is the reality that these materials are vital in developing a number of US defence platforms, including F-35 fighter jets, Tomahawk missiles and unmanned aerial vehicles (UAVs) – and all at a time in which China is expanding its own weapons production capabilities at a significantly faster pace than the US.

At present the impact of China’s export curbs on rare earths is expected to extend beyond military sectors with the US manufacturing industry in high-tech areas set to be particularly affected with possible production delays and material shortages.

In domino effect then, as prices for key rare earth elements are expected to rise as supply tightens, this will be reflected in increased production costs for consumer electronics, renewables components, and defence systems.

The US government has begun to take action, however, albeit somewhat belatedly, with President Trump ordering his Commerce Department to investigate the national security implications of dependence on foreign critical minerals.

How will the US respond - if it can?

Currently, the United States has only one operational rare earth mine but lacks the necessary facilities to process heavy rare earths. Somewhat ironically, for now, these heavy rare earths must be sent to China for refinement - thus the push by Washington to establish the US as a regional player in Ukraine’s mineral sector. Greenland too as the site of one of the world’s largest rare earth deposits has fallen under the gaze of the Oval Office to this end.

With anti-Trump sentiment solidifying around the world on the back of his recent tariff-tirade though, diplomatic tensions and geopolitical sensitivities have complicated such efforts to say the least.

At present then, while the US faces the dual challenge of having alienated China, the primary global supplier of rare earths, Washington has also seen its relations with potential alternative partners strained – a factor President Trump will likely ignore for now, but one China as expert in playing the long-game is well aware of.