China has proceeded to cut exports of seven rare earth elements along with high-performance magnets made from them, targeting global industries dependent on these essential materials. These elements play a crucial role in operating missiles, fighter jets, drones, submarines, electric vehicles, data centers, wind turbines, and the entire clean energy transition process. The cessation of supply has been used as a weapon, exposing the deep level of dependence of the United States and the world on supplies from China.
This does not come as a surprise to the United States, as Washington has been aware of this risk for nearly two decades. From Democratic to Republican leaders, all understand that the rare earth supply chain is too fragile and dependent on Beijing's control. However, previous administrations mainly stopped at sending messages and organizing forums without any substantial actions to address the issue. Currently, the consequences are clear: delays in production, difficulties for the defense industry, chaos in the supply chain, making the United States extremely vulnerable.
Infrastructure for exporting rare earth elements and trade data that China requires from U.S. companies
After high-level trade negotiations in London, China announced it would continue to license rare earth exports – however, only limited to the next six months. The details of the terms of the agreement remain confidential, and no authorities in Washington have publicly explained what concessions or benefits were exchanged for this concession. Although U.S. officials call this a diplomatic success, the reality shows that the lack of transparency and trust makes the situation unstable in the long run.
Meanwhile, U.S. companies have directly felt the consequences. Ford had to shut down its plant in Chicago due to a shortage of magnets – a necessary material for electric vehicle production, mainly caused by the freezing of the supply chain. The reality is no longer theoretical but is happening right in the United States. Policies, despite being called victories, still do not address the root issue: a lack of trust, transparency, and long-term policy.
Moreover, China's export licensing process currently requires European and North American companies to provide a range of sensitive data such as production specifications, end-use documentation, customer names, images of production facilities, and past transaction records. Many cases are denied licensing if they do not submit sufficient types of supporting images. This phenomenon is referred to by experts as 'extraction of official information' – meaning Beijing exploits bureaucratic procedures to gather business secrets.
Especially for defense contractors, this has become a serious threat to information security. If a company carelessly fails to provide sufficient details, it will be indefinitely delayed. Conversely, if too much data is shared, there is a risk of exposing technology or devaluing products. Notably, companies associated with the defense sector are completely excluded from this licensing agreement, further increasing barriers to accessing essential materials.
Overview of U.S. policies and reactions to ensure the supply of rare earth elements
The current situation did not arise naturally. In 2010, China halted rare earth exports to Japan amid maritime disputes. This was the first warning about the vulnerability of the global supply chain. In 2014, the Barack Obama administration won a case at the WTO opposing China's export restrictions but erred in believing that legal pressure would be enough to prevent future manipulation.
During Donald Trump's first term, his trade team identified rare earth elements as a strategic resource but seemingly did not include them in the 2018 tariff list to avoid losing supply. At that time, it could be understood as an acknowledgment that the U.S. could not easily give up this important material. The Joe Biden administration is taking a more systematic approach with measures such as Executive Order 14017, establishing the Strategic Minerals Task Force, allocating funds from the IIJA and IRA laws, and diplomatic efforts like the Mineral Security Partnership. Nevertheless, progress is still stalled due to prolonged licensing procedures, hesitant international partners, and slow-moving extraction projects.
At this point, the Trump administration has intensified actions upon returning to the White House. He used Section 232 to elevate the issue, activated the Defense Production Act, and proposed a significant budget increase for 2026. His team also established the National Energy Council to coordinate management. However, China still maintains the initiative. The U.S. defense industry is still blocked from accessing key raw materials, and the fundamental issue remains unresolved.
Reactions and strategies of international partners in response to China's dominance over rare earth elements
Besides the United States, many other countries are also warning of the risk of China using rare earth elements as a political tool. At the G7 conference held in Canada, European Commission President Ursula von der Leyen openly accused China of 'weaponizing' control over rare minerals and called for global solidarity. The G7 group announced the Strategic Minerals Action Plan aimed at enhancing recycling, establishing new supply standards, and co-funding research for refining technology, and replacing raw materials.
China's reaction to this plan has been very harsh and immediate. The Chinese Ministry of Foreign Affairs called it 'a cover for protectionism,' warning that the G7 is trying to isolate Beijing to maintain its dominant position in global trade. At the same time, the European Union affirmed that trade negotiations with China are at a standstill and warned of the risk of retaliation in the near future. If this happens, China could inadvertently push Europe, India, South Korea, and Japan closer to Washington in a new strategic alliance.
Controlling the supply of rare earth elements not only affects the industry but also has wide-ranging impacts on national security and global geopolitical status. The U.S. and its partners need to enhance cooperation, diversify supply chains, and accelerate alternative research to reduce dangerous dependence on a single country. Transparency and sustainable strategies are key factors in protecting industrial and defense security in the current geopolitical volatility.
Source: https://tintucbitcoin.com/trung-quoc-thieu-dat-hiem-my-gap-rut-du-tru/
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