US Rare Earth Rebuild Stalls as China’s Export Leverage Intensifies

Key points

• China controls approximately 91% of global rare earth separation and refining, giving it significant geopolitical leverage over the US military and industrial sectors.
• US efforts to rebuild domestic supply chains are hampered by a lack of experienced engineers, banned Chinese technology exports, and high costs, with full independence potentially taking 15 years.
• The US government has committed over $7 billion to rare earth projects, including a $400 million equity stake in MP Materials and $1.3 billion in loans for USA Rare Earth.
• China suspended six export controls in October 2025 until November 10, 2026, in exchange for the US pausing its 'affiliates rule,' but earlier controls on heavy rare earths and dual-use items remain in effect.
• Ford Motor Company idled a Chicago plant in May 2025 due to magnet shortages, highlighting the immediate economic impact of Chinese export restrictions on US manufacturing.

Background

Recent archive coverage notes that China’s rare earth magnet exports to the US dropped 13% year-on-year in August 2026, reflecting ongoing tensions. Additionally, the US has funded Australian projects, such as a $400 million loan to Sunrise Energy, to diversify supply chains, though production is not expected until 2028. Current diplomatic efforts, including the Trump-Xi summit, are focused on managing these supply chain dependencies amid broader trade rivalries.

How outlets are covering it

The Conversation emphasizes the historical loss of US processing dominance and the technical barriers to rebuilding it, citing the 1998 closure of the Mountain Pass separation plant. It highlights the immediate impact on companies like Ford and the strategic risk to military hardware. The Council on Foreign Relations (CFR) argues that supply-side investments alone are insufficient, advocating for demand-side protections and transatlantic coordination to deter Chinese coercion. CFR notes that China’s leverage extends beyond rare earths to batteries and chemicals, and that the current truce is fragile, with Beijing using license procedures to gather intelligence and restrict defense-related trade. Both sources agree that US dependence remains high, but CFR stresses the need for broader market restoration rather than just mine-to-magnet chains.

Why it matters

Rare earth elements are critical for modern technology, including smartphones, electric vehicles, and military equipment like F-35 jets and submarines. China’s control over processing allows it to disrupt global supply chains, posing a significant risk to US national security and economic stability. The inability to quickly rebuild domestic capacity leaves the US vulnerable to geopolitical pressure, potentially affecting defense production and industrial output. This dynamic underscores the strategic importance of critical minerals in international relations and the long-term challenges of achieving supply chain independence.

What to watch

The key date is November 10, 2026, when the suspended Chinese export controls are set to resume unless extended. The outcome of the Trump-Xi summit in September 2026 may influence this decision. In the interim, the US will continue to fund projects like MP Materials’ magnet plant, expected to begin testing in 2028, and USA Rare Earth’s facilities in Texas and Oklahoma. However, without a resolution to the broader trade and technology restrictions, the US may face continued supply disruptions and increased costs for critical materials.