The United States Treasury Secretary, Scott Bessent, stated that Beijing’s threat to stop rare earth exports was a “real mistake.” He emphasized that the United States would ensure alternative supplies within one to two years, at which point China would lose its rare earth leverage.
Following a meeting between President Donald Trump and Chinese leader Xi Jinping in South Korea, Bessent told the Financial Times that the leaders of the U.S. and China had reached a “balance.” However, he warned that China would no longer be able to use critical minerals as a coercive tool.
“China (the Chinese Communist Party) has made everyone aware of the danger. They have made a real mistake,” Bessent said, referring to the threat of halting rare earth exports.
“Showing the gun on the table is one thing, but firing it into the air is another,” he said.
He mentioned that the U.S. has corresponding measures in place to counter China’s rare earth ban. China’s leverage over the U.S. on rare earth issues will last “at most 12 to 24 months.”
Rare earths are crucial materials used in the manufacturing of electronics, guided missile systems, advanced fighter planes, medical devices, and high-tech industries. China controls 70% of global rare earth mining and 90% of rare earth processing. In recent years, rare earths have become a key secret weapon in Beijing’s diplomatic arsenal.
China has repeatedly used the threat of halting rare earth supplies as a bargaining chip in an attempt to gain concessions. The most recent instance was on October 9th when China’s Ministry of Commerce announced an expansion of export controls on rare earth products. Trump retaliated strongly the following day.
On October 30th, Trump and Chinese leader Xi Jinping met in South Korea. China agreed to postpone the implementation of rare earth export controls for a year, and the U.S. agreed to delay a measure that would blacklist thousands of Chinese companies.
Meanwhile, the Trump administration is intensifying efforts to find alternative sources for rare earths and other critical minerals to reduce dependence on Chinese supplies. During his recent trip to Asia, Trump signed rare earth and critical mineral agreements with Thailand and Malaysia. He also strengthened relationships with key allies such as Japan and South Korea, securing investments in shipbuilding and rare earth sectors. Bloomberg reported that bolstering these areas will give Trump a more advantageous position in negotiations with Xi Jinping in a year’s time.
On October 20th, Trump and Australian Prime Minister signed rare earth and critical mineral agreements. Australia is seeking to become an alternative source for China’s rare earth supply. Australian Treasurer Jim Chalmers stated that Australia is in a very advantageous position to meet global rare earth demands.
“We will collaborate with partners to ensure that we can become a very reliable supplier to meet the critical mineral needs of the U.S. and other global markets,” Chalmers said.
Australia possesses the world’s fourth-largest rare earth deposits and has a long history of rare earth mining, making it a feasible alternative source for China’s rare earth supply. Australia is also the headquarters of the only rare earth producer outside of China.
China’s rare earth threat has not only sparked angry responses from the U.S. but also prompted action from the European Commission President Ursula von der Leyen, who stated on October 25th that the EU is prepared to use all “tools” when necessary. The EU will also cooperate with G7 partners to take coordinated response measures.
President von der Leyen said that to break the EU’s excessive reliance on China for key material imports and refining, the European Commission will present a new EU resource plan, “RESourceEU.” The plan aims to ensure that European industries have alternative sources for critical raw materials in the short, medium, and long term.
Bessent said, “I think the Chinese leadership is somewhat worried about the global opposition stirred by their export control measures.”
Analysts point out that China’s rare earth threat will only accelerate the West’s search for alternative sources, investment in related companies, and drive the development and processing of rare earths. This will weaken China’s control over rare earths, and in the near future, China’s rare earth leverage will no longer exist. Meanwhile, Chinese rare earth suppliers will face difficulties due to losing Western customers.
In mid-October, Bessent warned that China’s rare earth threat once again highlighted the risks of relying on the country for these products. If China wants to become an unreliable partner to the world, then the world must “decouple” from it.