Inside Trump's Scramble to Cut US Reliance on Chinese Critical Minerals

Last week, the US Treasury Secretary came back from a southern state displaying a small piece of metal, announcing it was the first rare-earth magnet made in the US in 25 years.

He remarked that this was proof the US is breaking “China's dominance on our industrial pipeline.” Thanks to a recently opened rare-earth mineral manufacturing plant in South Carolina, he added, “The nation is regaining its autonomy.”

Countering China’s Dominance in Essential Minerals

Overthrowing China’s processing and manufacturing dominance in these materials, which are crucial for advanced electronics, energy storage, and military equipment, is a key goal for the American leadership. Using trade measures and other strategies, the US is betting on bringing the industry back to domestic facilities.

These measures led China to restrict rare-earth shipments to the US and pushed the administration to sign deals with an ally, a partner, Cambodia, and a key Asian economy.

While the US and China have since reached a temporary agreement on rare earths, Beijing—with around 70% of global mining and over 90% of global processing capacity—has a head start that may prove challenging to erode.

“Rare earths are essential for electric motors but also in guidance systems that have clear uses for the defense department,” says an industry expert. “Anything that has a strong magnet in it uses rare earths.”

No Easy Fix for US Independence

There’s no easy fix for the US to reset its dependence on Chinese production of minerals essential to national security, semiconductor production, and the shift from traditional energy to wind and solar. According to official sources, the US imported the vast majority of the rare earths it used in 2024.

In the case of rare-earth minerals such as dysprosium, used in chip production, and samarium, essential to military applications, Chinese refinement dominance rises to 99%. Dysprosium and terbium are used in magnets essential for electric engines and power systems in wind turbines, along with applications for mobile devices, high-intensity lighting, and energy plants.

Long-Term Efforts and Global Deposits

Initiatives to cut the US’s dependence on Chinese production of rare-earth minerals may require a long time. Experts note that “Rare earths” is not entirely accurate because they’re relatively abundant in the planet's surface, but many reserves, including those in Ukraine, where an agreement was signed recently, are only in the initial phases of extraction.

“It’s not that there’s a shortage itself, it’s that Beijing can control how much is sent abroad,” a specialist explained, adding that obtaining permits from China can be a lengthy, difficult process.

Greenland, another focus of US attention, and South America, are two other countries with significant rare-earth resources. Domestically, there are reserves in the West, the Midwest, and the central US, with the biggest active site located at Mountain Pass, the state, about 60 miles from Las Vegas.

Federal Efforts and Investment

Recently, the Pentagon took on the role of the largest shareholder in a mining company, with intentions to open a new “integrated” plant, called a new facility, to make magnets essential for F-35 fighter jets, drones, and naval vessels.

In North America, measured and indicated resources of rare earths were estimated to include 3.6m tons in the US and additional millions in Canada—significantly lower than the vast reserves believed to be in China.

Mirroring government funding in the steel industry and domestic technology firms, the federal agency announced it was ready to make direct investments in critical mineral companies.

“You’re competing against government-backed investment because Beijing is selecting these strategically that they aim to control,” a cabinet member said during a speech in April.

The official floated that the US could use a sovereign wealth fund to speed production. “Why wouldn’t the wealthiest country in the world have the largest sovereign wealth fund?” he questioned.

Historical Obstacles and Prospects

US efforts to promote homegrown output have floundered in the past when China cut costs, making unsubsidized rare-earth development unprofitable against Asia's competitive pricing and long-term strategic outlook.

Five years ago, an industry leader stated before a US Senate committee that “those who invest in battery capacity and supply chains now are likely to dominate this industry for the foreseeable future. It is not too late for the US but immediate steps are required.”

Since then, a race to assemble trading alliances around rare earths is accelerating.

“In about a year from now, we’ll have an abundance of critical mineral and rare earths that supply will exceed demand,” the President informed reporters. This followed eight months after a demand for compensation in the form of natural resources from another country. More recently, the authorities in Asia signed a contract with an American company, securing rights to minerals such as key metals.

Can the US Succeed?

But, can the US make up its shortfall and weaken China’s hold on rare-earth global networks? “America has implemented major measures so far,” an analyst says. The US, he adds, cannot be “independent in the near future because it takes time to start operations and build refining capacity.”