Unnerved by its recent trade spat with China, the Trump administration is turbocharging efforts to forge a domestic supply chain for rare earths, the powerful materials that underpin technology from wind turbines to F-35 fighter jets.
China built itself into the world’s rare-earth powerhouse over a decades-long push, and today it commands around 85 percent of processing and more than 90 percent of magnet production. When U.S. President Donald Trump launched his trade war in April, Beijing struck back by leveraging that rare-earth chokehold—ultimately forcing U.S. officials to the negotiating table.
Those tensions jolted U.S. lawmakers, who have long been aware of the United States’ mineral vulnerabilities and have in recent months introduced a flurry of legislation aimed at jump-starting a domestic industry. The Defense Department is now going even further, recently sealing a multibillion-dollar deal that would see it become the largest shareholder in MP Materials, which operates the only rare-earth mine in the United States.
Yet even as lawmakers race full speed ahead to boost the U.S. rare-earth industry, the country isn’t quite out of the woods. If rare earths again surface in another U.S.-China trade spat, Washington will still be vulnerable—at least in the immediate future.
China “can switch on the tap whenever they want to and switch it off whenever they want and control the market,” said Neha Mukherjee, a rare-earth analyst at Benchmark Mineral Intelligence, a London-based consultancy.
The outlook wasn’t always so bleak for the United States, which was once home to a robust rare-earth industry. But the country turned away from mining decades ago as environmental concerns grew and financial challenges plagued companies, and U.S. lawmakers began to see the industry as one that should be outsourced to other countries.
“We closed our Bureau of Mines. We reduced our funding. We reduced our [research and development],” said Gracelin Baskaran, the director of the critical minerals security program at the Center for Strategic and International Studies, a Washington-based think tank. “Thirty years later, we’re feeling the consequences of that deprioritization.”
Having been out of the game for so long, it has been difficult for U.S. firms to muscle their way back in, in part because of an expertise gap that emerged as the United States turned away from mining. And then there’s the financial challenge. China’s commanding grip over market supply has also allowed it to influence global prices, making it difficult for anyone else to compete.
“These are extremely small markets, and there is no global exchange,” said Ashley Zumwalt-Forbes, a former deputy director for batteries and critical materials at the U.S. Energy Department, who said rare earths are generally traded on a spot market with largely Chinese-driven pricing.
“It’s extremely opaque, and so even just understanding the market and understanding the rules of engagement is challenging,” she said.
However, the Trump administration is betting that it can turn a new page. The Pentagon is now getting involved, with a recent announcement that it will back MP Materials with an unprecedented level of federal government support.
Under the multibillion-dollar agreement, MP Materials will build a new factory for rare-earth magnets, which the firm expects to launch in 2028. The U.S. government has committed to purchasing the factory’s output and set a price floor to help shield the company from financial strains and market pressures, namely ones that could be driven by Beijing.
“This is not a level of support we’ve ever provided to the mining sector, and it’s one of the reasons that the mining sector has failed to be competitive in the United States,” said Baskaran, who said the price floor model could be a “game-changer” for getting Western companies into the sector.
The deal is a huge triumph for MP Materials, which has for years endeavored to carve out a larger stake in the global market. The firm’s stocks soared in the wake of the announcement, and this week Apple joined in with its own $500 million partnership with the rare-earth miner.
Matt Sloustcher, the chief communications officer at MP Materials, touted the company’s deal with the Defense Department as a “massive catalyzing event.” “This will dramatically accelerate the achievement of an end-to-end supply chain at scale,” he told Foreign Policy.
This flurry of deals is coming on top of a raft of legislation introduced by lawmakers on both sides of the aisle. In February and March, lawmakers in the House and Senate introduced the Rare Earth Magnet Security Act and Critical Minerals Security Act, respectively, both of which are aimed at helping Washington to secure new mineral supply chains and diversify away from China.
This week, Republican Rep. Gary Palmer also introduced a new piece of legislation, the Securing America’s Mineral Supply Act, which would codify five executive orders issued by Trump that are focused on boosting domestic mineral production and processing.
“Dependence on China for critical minerals is an undeniable threat to our national security,” Palmer said in a statement. “This bill is just one step toward ending that dependency.”
Even with this momentum, many challenges lie ahead. China overwhelmingly dominates the separation of heavy rare earths—which the United States still cannot do on a commercial scale—giving it key leverage in its most recent trade spat with Trump. To contend with Beijing, MP Materials will need more of the heavy rare earths that do the big lifting for critical inputs. With magnets, too, there is a big learning curve.
“Permanent magnets are notoriously challenging from an intellectual property standpoint, as well as simply from a production know-how standpoint,” Zumwalt-Forbes told Foreign Policy earlier this month. “This is something that is not a built-out industry in the U.S.”
That means that for all of Washington’s efforts, China still has a powerful hand to play in trade fights in the immediate future. “This doesn’t really emerge as a substantial change to our negotiating position until MP starts delivering magnets,” Zumwalt-Forbes said.
China, too, is not standing still. As trade tensions have flared, Beijing has tightened its grip on its own industry, including by reportedly developing a formal catalog of its rare-earth experts and taking passports to monitor overseas travel.
“China is still expected to grow, and China is still expected to maintain quite a big share of the global supply and demand,” Benchmark’s Mukherjee said.
Still, for the United States and its allies, the genie is out of the bottle. By wielding its rare-earth card in trade negotiations, Beijing has demonstrated to much of the world that it is not a reliable supplier—and the damage may be done.
“They now need to contend with the fact that everybody else is going to react to this,” said Fabian Villalobos, a senior engineer at Rand. “They now have to deal with a set of countries that is pretty alarmed by what happened.”