In response to the Chinese Communist Party’s use of rare earth monopoly to threaten the survival of American military, computer chip, and automobile industries, the United States is collaborating with allies to establish a rare earth supply chain independent of China. Officials and experts predict that this day may arrive in 3 to 4 years.
US Treasury Secretary Scott Benson told the Financial Times on October 31 that Beijing’s threat to halt rare earth exports is “a real mistake” and insisted that in the near future, China cannot continue to use rare earths as a coercive tool. He said, “China’s influence on the United States in the rare earth field can only last for 12 to 24 months at most.”
While there are different opinions on how long it will take for the US to establish its own rare earth supply chain, the consensus among many officials and experts is that the CCP’s use of rare earth monopoly to threaten the US is like “shooting oneself in the foot”.
Former chief economist of the International Monetary Fund and current professor of International Economics at Harvard University, Kenneth Rogoff, told Dajiyuan, “I can be sure that China will severely weaken its monopoly position through this action because other countries will gradually develop alternative sources.”
Vincent Harris, a professor in the Department of Electrical and Computer Engineering at Northwestern University, told Dajiyuan that China’s coercion through rare earth seems glorious, but in reality, it is entering a dangerous situation.
“This is like a poker game. China uses its rare earth monopoly as a geopolitical tool, some say it’s a geopolitical weapon, in order to exert influence and achieve its goals. They have been very successful in this aspect over the past 10 to 20 years through withholding or enforcing rare earth quotas in distribution and marketing. But they have to be very careful in doing this because if they push the EU or the US too hard, then these countries will find substitutes, replace rare earth magnets, and then China will lose that tool, that capability.”
On October 9, China’s Ministry of Commerce implemented the strictest export control measures on rare earths and permanent magnets to date in Announcement No. 61 of 2025. According to the measures, foreign companies exporting magnets that contain trace amounts of Chinese rare earth materials or are produced using Chinese mining, processing, or magnet manufacturing technologies must obtain approval from the CCP government. The new licensing system will apply to foreign production of rare earth magnets and specific semiconductor materials containing at least 0.1% Chinese-produced heavy rare earth elements.
Given China’s dominant position in the field—accounting for about 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing—these measures will affect US defense production, including F-35 fighter jets, Virginia-class and Columbia-class submarines, Tomahawk missiles, radar systems, Predator drones, and the Joint Direct Attack Munition (JDM) series of smart bombs, and thus will have a significant impact on US national security. Starting from December 1, 2025, companies associated with foreign militaries (including the US military) will be essentially denied export permits.
At this critical juncture, the US government signed rare earth mineral cooperation agreements with Australia, Japan, Thailand, Malaysia, and several other countries within just ten days.
On October 20, during the visit of the Australian Prime Minister to the White House, the US and Australia signed an agreement aimed at increasing the supply of rare earths and other critical minerals. Australian Prime Minister Anthony Albanese said the agreement will support “shovel-ready” projects worth $8.5 billion USD (13 billion Australian dollars; 6.3 billion pounds) that will expand Australia’s mining and processing capabilities.
On October 27, US President Trump kicked off his Asian tour on the eve of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea. Along the way, Trump announced three new agreements with Malaysia, Thailand, and Japan to strengthen cooperation in critical mineral areas and promote industrial partnership. This series of mineral agreements marks America’s efforts to intensify collaboration with like-minded partners in the Asia-Pacific region to construct a secure mineral supply chain.
The Asia-Pacific region is rich in mineral resources, possessing mining technologies, industrial capacities, and developed downstream markets, making it a strategic hub for China’s surrounding mineral supply chains. Besides China, the region holds approximately 25% of global cobalt reserves, 65% of nickel reserves, and 22% of rare earth element reserves, distributed in countries such as Australia, Indonesia, Vietnam, and Malaysia.
The US is now looking to establish its mineral investment foundation in the region and actively counterbalance Beijing’s dominant position.
The Pentagon has also taken swift action. Since 2020, the US Department of Defense (now the Department of War) has allocated over $439 million to establish a domestic rare earth elements supply chain. This includes the separation and refinement of rare earth elements mined in the US and the development of downstream processes needed to transform these refined materials into metals and magnets.
According to a news release on the US Department of Defense website dated March 11, 2024, Danielle Miller, Acting Deputy Assistant Secretary for Industrial Base Resilience, stated, “We are making progress as planned, aiming to establish a sustainable supply chain from mine to magnet by 2027 to fulfill all US defense needs.”
The US and its allies have the capacity to establish their own supply chains, but Harris points out that there is a major obstacle to sustaining Western supply chains, which is the significant price gap between Western and Chinese products.
“When we put those products for sale on the open market, company-to-company head-to-head, our costs are 100 times higher than those coming from Baotou. It’s just a brutal fact.”
The massive price difference between US and Chinese products is due to the fact that rare earth mining is an industry with severe pollution. The US Environmental Protection Agency has set strict environmental standards for mining companies, while the CCP, in order to obtain its rare earth monopoly, chose to sacrifice the environment and people’s health.
Harris said, “There was a very, very important event from 1980 to 1990. The mainland China made a decision. They would do whatever it took to process those materials and in a cheap, cost-effective way, no matter what the consequences, almost even if it meant damaging and destroying the environment and water supply of mainland China. In order to make the best magnets globally, this is the deal they made with the devil.”
Harris estimates that the price of rare earth magnets produced by US companies may be 100 to 500 times more expensive than Chinese magnets.
To ensure that Western supply chains can resist China’s low-cost dumping, Harris, who previously worked at the State Department, advised the Secretary of State to track rare earth products using the Kimberley Model and prohibit Western companies from purchasing Chinese rare earth products.
Harris was appointed as a Jefferson Science Fellow for 2020-2021. The Jefferson Science Fellows program aims to enhance and cultivate professional talents in the fields of science, technology, and engineering. The program is managed by the US National Academy of Sciences, Engineering, and Medicine, with support from the US State Department and the US Agency for International Development (USAID). Jefferson Science Fellows are assigned to work in the State Department or USAID in Washington, D.C. for a year.
Harris explained that around 30 years ago, some African countries enslaved men, women, and even children to mine diamonds, and the West termed these diamonds tainted with slave labor as “blood diamonds”. Western countries decided to boycott these blood diamonds, and anyone found trading blood diamonds would be punished. But how to confirm where a diamond came from?
Harris said that diamonds originating from the Kimberley mine have a unique radial fingerprint that can be used to trace their origin. It is called the Kimberley Model. Similarly, rare earths from Inner Mongolia also possess such a radial fingerprint. This feature can be utilized to trace the origin of rare earths.
Harris suggested that Western allies should establish their own supply chains and mandate that Western companies must not purchase Chinese-produced rare earths—even if they’re 100 times cheaper.
“If we form a consortium of five countries, and then if you want to join this consortium, you have to pay a higher fee (to buy rare earth). What did you get in exchange for this higher fee? You get security… You have supply chain security, but you have to pay for it.”
Contrary to Secretary Benson’s expectation, Harris estimates that it will take three to four more years for the US to establish its own rare earth supply chain.