China holds a powerful card in the ongoing trade war with the administration of U.S. President Donald Trump—its dominance over the extraction and export of rare earth metals. These metals are used to power everything from iPhones to electric cars, and they are essential components of the advanced technologies that will shape the future.
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Rare earth metals consist of 17 elements that are more abundant than gold and can be found in many countries, including the United States. However, their extraction and processing are difficult and costly, according to CNN. The American news network noted that China's dominance in the rare earth supply chain has emerged as one of its strongest tools in its renewed trade conflict with the United States.
CNN reported that, unlike tariffs, this front offers Trump limited room for retaliation. For decades, the United States and other countries have relied on China for processed supplies of these metals.
China accounts for 61% of global rare earth production from mines, but it controls 92% of the global processing output, according to the International Energy Agency.
On April 4, after years of subtle warnings, the Chinese government imposed export restrictions on seven types of rare earth metals in response to Trump’s 34% retaliatory tariffs on Chinese goods. The new rules require companies to obtain government permission to export the seven metals and related products, such as magnets.
Magnets made from rare earth metals allow for the production of smaller, more efficient motors and generators. These are used in smartphones, electric and jet engines, MRI machines, and are key components in high-cost weaponry, from F-35 stealth fighter jets to nuclear-powered attack submarines.
On Tuesday, Trump ordered an investigation into potential tariffs on critical minerals—a broader category that includes rare earth elements—to assess the impact of these imports on America’s security and resilience.
In an executive order, Trump stated:
"The United States’ dependence on imports and the vulnerability of our supply chains increase the likelihood of risks to national security, defense readiness, price stability, economic prosperity, and resilience."
Since Trump’s first administration, the United States has been striving to catch up with other nations and build a domestic supply chain for rare earths.
Three U.S. companies specializing in rare earth production told CNN they are working to expand production capacity and source materials from U.S. allies and partners. However, these efforts will take years to meet the high demand from major U.S. industries.
For now, the impact of Beijing’s export controls is already being felt. John Ormerod, founder of JOC, a rare earth magnet consultancy, told CNN that rare earth magnet shipments from at least five U.S. and European companies have been halted in China since the regulation came into effect.
Joshua Ballard, CEO of USA Rare Earth, said the export controls focus on heavy rare earths, which China controls 98% of.
He added that companies now need Beijing’s approval to supply these critical materials to key U.S. industries.
Thomas Krummer, director at Ginger International Trade and Investment in Singapore, which specializes in metal and mineral supply chains, said the export controls target not just raw materials, but also alloys and products containing these elements—even in small amounts.
He said:
"Many exports are now subject to this licensing system," noting expected delays as exporters adapt to the new rules.
China began extracting rare earths as early as the 1950s, according to state media, but the industry didn’t begin to truly develop until the late 1970s.
During that time, China combined low labor costs, relatively lax environmental standards, and the adoption of foreign technologies, according to Stan Trout, founder of Spontaneous Materials, a consultancy specializing in rare earths and magnetic materials.
"Much of the technology they adopted was developed in the U.S., Japan, or Europe. Over time, I’m sure they improved on it," Trout said.
As China’s rare earth production grew, Beijing gradually realized the strategic importance of these metals.
"They understood that this technology could be crucial to them and that they needed to master it," Trout added.
Between 2020 and 2023, the U.S. relied on China for 70% of its imports of all rare earth elements and related compounds, according to a recent report by the U.S. Geological Survey.
Experts and industry insiders say China’s export controls have left the rest of the world with very limited alternatives. Still, the U.S. is working to close that gap.
Since 2020, the U.S. Department of Defense has allocated over $439 million to develop domestic supply chains for rare earth elements.
The goal is to establish a sustainable supply chain—from mining to magnet production—that can meet all U.S. defense requirements by 2027.
Some American companies see China’s export controls as an opportunity to accelerate domestic production and push toward a stronger supply chain independent of China.
Progress is being made on parts of the supply chain. U.S. company USA Rare Earth is building a magnet plant in Texas, aiming to produce 5,000 tons of rare earth magnets annually. The company also owns a mine in West Texas rich in heavy rare earths, including all those listed in China’s latest export control list. However, the company is still working on developing the processing technology needed to extract the metals from the ore.
