October 24, 2025 | China Rare Earth Grip Tightens

The global fight over rare earth elements has entered a new and dangerous phase. China holds the advantage—and Washington has few good options.

In October, Beijing announced new restrictions on exports of rare earth elements (REEs). Any product containing even trace amounts of China-sourced materials could now require special approval or be denied altogether. The move was a direct response to the U.S. ban on NVIDIA’s H20 AI chips bound for China, and the timing—just before a planned Trump-Xi meeting—was deliberate.

A Monopoly Built Over Decades

Despite the name, rare earths aren’t rare. What’s rare are deposits rich enough to mine economically—and a willingness to tolerate the messy processing required. China does both. It produces roughly 70 percent of the world’s supply and refines more than 95 percent of it.

Source: BBC

That dominance gives Beijing leverage over a stunning range of industries: wind turbines, electric vehicles, nuclear reactors, rechargeable batteries, F-35 jet engines, Tomahawk missiles, radar, smartphones, and MRI machines all depend on these obscure materials.

The Heavy Advantage

The most valuable group—known as “heavy” rare earths—involves names that are difficult to pronounce and impossible to spell: gadolinium, dysprosium, terbium, holmium, erbium, ytterbium, yttrium, samarium, lutetium, and scandium. These are vital for high-strength permanent magnets and advanced alloys used across defense and clean energy. Nearly all come from China, Mongolia, and Myanmar.

Production is tightly managed by two giant, state-controlled groups: China Rare Earth Group, in the south, and China Northern Rare Earths, in Inner Mongolia. Together they ensure Beijing’s control extends from the mine to the export license.

Washington’s Weak Hand

The U.S. imports about 10,000 tonnes of rare-earth magnets from China each year, with demand rising fast. Domestic mining projects exist, but refining capacity is minimal. Re-creating the full supply chain would cost billions and take years—perhaps decades.

President Trump has treated the issue as another front in his tariff war. On October 20, 2025, he sounded characteristically upbeat:

“I think we’re going to end up having a fantastic deal with China. It’s going to be fantastic for both countries, and it’s going to be fantastic for the entire world.”

When pressed on China’s leverage, Trump replied, “They threatened us with rare earths, and I threatened them with tariffs.” Days later, he vowed to impose a 100 percent tariff on Chinese goods starting November 1.

But tariffs can’t outmuscle geology—or decades of Chinese industrial planning.

The Long Road to Independence

The U.S. is now scrambling to rebuild its rare-earth capacity through projects in California and partnerships with Australia. Even under optimistic timelines, it will take years to wean the defense and tech sectors off Chinese supply.

Until then, the United States will remain dependent on its rival for materials that power its newest technology and most advanced weapons.

China’s message is clear: control the inputs, and you control the future.

Hilliard MacBeth

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Hilliard MacBeth October 24th, 2025

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