As a response to the tariffs imposed by US president Donald Trump, Beijing responded earlier this month by halting exports of their critical minerals. As the producer of around 90% of global supply of rare earths, this is a strategic move by the Chinese government, showcasing their dominance over this group of critical elements which are important for defense, EVs, and other key industries. The restrictions currently cover seven of the 17 rare earth elements and requires companies to secure special export licenses to export the materials.
Analysts are now considering the impacts that these restrictions will have on the US and the risks to its defense industry, such as with F-35 fighter jets, Virginia- and Columbia-class submarines, Tomahawk missiles, radar systems, and more. Gracelin Baskaran from The Center for Strategic & International Studies has highlighted how the US is vulnerable in the supply of these seven elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium and how these restrictions could exacerbate existing supply chain limitations, enabling China to enhance its military capabilities more rapidly than the US.
There is currently no heavy rare earths separation happening in the US, though plans are underway. MP Materials Corp., operating out of California and Texas, is currently producing some light rare earths, which could help to alleviate some of the supply chain bottlenecks, however this doesn’t address the supply of the medium and heavy rare earths which are crucial for these military applications.
The export controls are expected to have broader impacts outside of the US, disrupting the global supply chains for these key elements and could potentially lead to further inflation, supply shortages, and more.
