China’s repeated use of rare earth export controls over the past year signals a strategic shift in how Beijing views its leverage over the United States, according to Foundation for American Innovation fellow Farrell Gregory, who argues that these disruptions are no longer episodic shocks but part of an emerging pattern.
In an analysis circulated this week, Gregory said China has now twice suspended access to certain rare earth elements and downstream products through export licensing regimes, briefly rattling markets and policymakers in Washington before trade flows were restored. Each episode followed a familiar arc: initial alarm in the United States, followed by counterclaims that rare earths are not truly scarce, and eventually a quiet easing of restrictions after negotiations and concessions.
“What matters less than the specifics of each episode is the pattern that is forming,” Gregory wrote. “China is increasingly willing and able to use its dominance in rare earths as leverage against the U.S.”
That posture marks a clear departure from recent history. During the 2019–2020 U.S.–China trade war, Beijing refrained from imposing formal export controls on rare earths, despite public threats. Gregory argues that China now sees its position differently, having consolidated its advantage across mining, processing and magnet production.
Gregory said Beijing may be acting out of a recognition that its dominance has a shelf life. As the United States and its allies invest in reshoring and alternative supply chains, China’s ability to extract concessions could erode.
“In the near term, throttling rare earth and magnet exports remains an effective threat,” he wrote. “In the medium term, successful reshoring efforts will reduce what concessions China can realistically extract.”
That dynamic, he said, makes further disruptions likely rather than exceptional.
Why ‘abundant’ does not mean available
A persistent misconception in U.S. debates is that rare earths are plentiful because trace amounts of the 17 elements exist throughout the Earth’s crust. Gregory cautions that commercial reality is far more restrictive.
To be viable, deposits must be both highly concentrated relative to global averages and economically workable once prices, infrastructure, mine life cycles and financing are factored in. Deposits meeting those criteria are uncommon.
That scarcity is reflected in global output. Gregory noted that just five mines, three in China, one in Australia and the Mountain Pass mine in California, account for roughly 85% of global rare earth production by weight.
Mountain Pass, once the world’s dominant supplier during the Cold War, lost ground to Chinese producers by the late 20th century and shut down entirely in the 2010s. Despite its revival under MP Materials and substantial U.S. government backing, the United States accounted for only about 11% of global total rare earth oxide output in 2024, Gregory said.
“Mining rare earth elements at scale in an economically feasible way requires a good site,” he wrote. “Those sites are hard to find.”
The challenge deepens when rare earths are broken into subcategories. Deposits contain different mixes of light rare earth elements (LREEs) and heavy rare earth elements (HREEs), each with distinct industrial uses.
Mountain Pass, Gregory said, is effectively an LREE-only site. It produces valuable neodymium and praseodymium, key inputs for magnets used in electric vehicles, wind turbines and robotics, but lacks meaningful quantities of heavy rare earths such as dysprosium and terbium.
Those heavy elements are critical for high-performance neodymium iron boron magnets that can operate under higher temperatures and mechanical stress. Without them, domestic production of many advanced electronics becomes impossible.
This vulnerability helps explain why recent Chinese export controls have focused on heavy rare earths. While China mines roughly 70% and refines about 90% of rare earths globally, Gregory said its dominance in heavy rare earths reaches about 99%.
Even if U.S. efforts to build a domestic light rare earth and magnet supply chain succeed, a result Gregory described as far from guaranteed—Washington would still depend on China for heavy rare earth inputs.
Geology, not just processing
Another frequent argument is that China’s advantage lies primarily in refining rather than geology. Gregory said that view is incomplete.
Heavy rare earths are often found in ionic clay deposits, which are particularly prevalent in southern China due to favorable topology, climate and soil conditions. These deposits are easier to exploit but have historically caused severe environmental damage through chemical leaching.
Much of this extraction has increasingly shifted across the border into Myanmar, where environmental safeguards are weaker and political instability persists. Although rebel activity temporarily disrupted Chinese access to some mines in late 2024, Gregory said the geology remains attractive enough to keep the region central to China’s supply chain.
The United States does have potential heavy rare earth deposits, according to studies by the U.S. Geological Survey, but higher environmental standards would raise costs and slow development. Brazil, which holds the world’s third-largest rare earth reserves, could eventually play a larger role, Gregory said, but current production is negligible—about 20 tons of rare earth oxide in 2024 compared with China’s roughly 270,000 tons.
Against this backdrop, the U.S. government has stepped up investment. Since a rare earth détente earlier this year, the Office of Strategic Capital has committed $1.4 billion to expand domestic magnet supply chains, while the U.S. Department of Energy has allocated $134 million to rare earth production initiatives. Congress has separately appropriated about $1 billion for rare earth projects.
Gregory said the Trump administration has made reshoring rare earths a priority, a move he views as positive but still constrained by geology and chemistry.
“Not all critical minerals pose the same level of risk,” he wrote, pointing to the 2025 USGS Critical Minerals List, which ranks rare earths among the most strategically significant and most vulnerable to supply disruptions.
With limited capital and expertise available, Gregory argued that treating all critical materials as equal dilutes impact. “Actually reducing reliance on China for rare earths will require focused investment,” he said, “and a realistic accounting of the geological advantages that give China an enduring edge.”
As Beijing’s leverage narrows but remains potent, Gregory concluded, further rare earth disruptions should be expected rather than feared as anomalies.
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