China’s Rare Earth Dominance: What It Means for the U.S.
The trade war between the United States and China has flared up once again after a months-long truce — this time over a less visible but critically important resource: rare earth elements.
China holds a commanding position over the global supply of these minerals, which are essential for producing electric vehicles, consumer electronics, and advanced military technologies. In recent months, Beijing has tightened export controls, requiring Chinese companies to obtain government approval before shipping rare earths overseas.
These restrictions have dealt a serious blow to the U.S., whose industries remain heavily reliant on imports of these minerals. Analysts say China is using its rare earth dominance as leverage in ongoing trade negotiations with Washington.
But what exactly are rare earths, and why do they matter so much?
What Are Rare Earths — and Why Are They Critical?
Rare earth elements are a group of 17 chemically similar metals used in a wide range of high-tech applications. Despite the name, most are fairly abundant in the earth’s crust. They’re considered “rare” because they are difficult to extract and rarely found in concentrated, economically viable deposits. The extraction and refining processes are also environmentally hazardous.
Even if you haven’t heard of elements like neodymium, yttrium, or europium, you’ve almost certainly used devices made with them. For example:
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Neodymium is used in powerful magnets found in EV motors, jet engines, hard drives, and loudspeakers.
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Yttrium and europium are vital for producing vibrant colors on TV and computer screens.
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Rare earths are also key to MRI machines, laser surgery tools, and advanced defense technologies.
“Everything you can switch on or off likely runs on rare earths,” says Thomas Kruemmer, Director of Ginger International Trade and Investment.
China’s Strategic Control
China dominates both the extraction and refining of rare earths — controlling an estimated 61% of global productionand 92% of processing capacity, according to the International Energy Agency (IEA).
That dominance gives Beijing vast control over global supply chains. Because processing rare earths produces radioactive waste and significant pollution, many countries — including those in the EU — have avoided entering the market.
“Radioactive waste from production absolutely requires safe, compliant, permanent disposal. Currently all disposal facilities in the EU are temporary,” Kruemmer explains.
But China’s dominance didn’t happen overnight. It’s the result of decades of strategic investment and industrial planning. In 1992, Chinese leader Deng Xiaoping famously declared: “The Middle East has oil, and China has rare earths.”
“Since the late 20th century, China prioritized rare earth development, often operating with lower environmental and labor standards,” says Gavin Harper, a critical materials expert at the University of Birmingham. “This allowed them to undercut competitors and build a near-monopoly from mining to finished products.”
Beijing Tightens the Screws
In response to new U.S. tariffs introduced in April, China began restricting exports of seven rare earth minerals — particularly heavy rare earths, which are rarer, harder to process, and essential for military use.
Exporters in China now need special licenses, and as of October, even foreign companies must obtain Chinese government approval — and justify their intended use — before exporting rare earths or related products.
As a signatory of the Nuclear Non-Proliferation Treaty, China can legally regulate the export of so-called “dual-use” materials — items that have both civilian and military applications.
According to the Center for Strategic and International Studies (CSIS), this leaves the U.S. especially vulnerable, as there is currently no capacity outside China to process heavy rare earths.
Prices are already rising, which could increase the cost of everything from smartphones to missile guidance systems and slow down production in sensitive industries.
