Breaking China's Stranglehold on Rare Earth Elements
Beijing uses its near-monopoly on critical minerals to win trade concessions. Can the U.S. find alternate supplies?
 
To help you understand what is going on in the economy, politics and beyond, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we publish many (but not all) of our forecasts a few days afterward online. Here’s the latest...
One of China’s most potent trade weapons that it is wielding as the U.S. threatens new tariffs is a near-stranglehold on rare earth elements, a group of obscure minerals that happen to be vital to many high-tech applications and products. It’s not that rare earths are rare, exactly. But they are hard to mine and process. They aren’t evenly distributed across the world. Extracting and refining them is a messy process that can cause a lot of pollution. 
China realized this decades ago and decided to exploit its sizable deposits of rare earths, ignoring the environmental damage. Its leaders wanted to corner the market, and they did. Consider the things that require rare earths: Drones. Missiles. Fighter jets. Spacecraft. Wind turbines. Electric cars. AI servers. That’s just a partial list. In general, rare earths are key to the magnets in advanced electric motors. Thus, they are vital for applications like advanced robots.
The U.S. has already eased up on tariffs in response to China’s recent ban on rare earth exports. But Beijing is still slow-walking sales of rare earths to American importers. What’s more, it still does not permit exports of them to U.S. defense contractors. Companies here and abroad are scrambling to lessen their dependence on rare earths where possible, knowing that China could cut off their supplies. BMW, for example, sells EVs whose electric motors don’t use rare earths. Other automakers are trying to do likewise. Japan has stockpiled a year’s worth of rare earths, after it suffered from an earlier Chinese export ban over a decade ago. But that is just a stopgap. 
What’s needed is rare-earth mines and processing plants outside of China. Unfortunately, it takes time to open them: Three years, by one estimate. Still, expect a concerted push to reduce the world’s reliance on China. Countries with the most promising deposits: Brazil, South Africa, Namibia and other African nations. Greenland is also believed to have a rich trove of them, one reason President Trump is so keen on acquiring it, but mining may not be doable. 
For now, the U.S. has only one functioning mine, called Mountain Pass, in California. New processing plants are a work in progress. One just opened in Malaysia. Australian miner Lynas is building another in Texas, but is waiting for new funding from Uncle Sam. There is also talk of a plant in Nebraska at NioCorp’s Elk Creek deposit. There are two major hurdles to building these plants: First, their wastewater and other toxic by-products generally provoke local opposition. Second, Beijing has positioned China as the main maker of the equipment for processing rare earths.
Ultimately, it’s going to take some political willpower, either in the U.S. or overseas, to support (and likely fund) alternatives to China’s monopoly on supply.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
 
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related content
- What’s Happening With Trump Tariffs? News, Updates and Analysis
- Trump Dials Back Most Tariffs but Targets China
- Kiplinger Trade Outlook
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.
- 
 I'm a Government Employee and Need to Get By Until the Shutdown Ends. What Can I Do? I'm a Government Employee and Need to Get By Until the Shutdown Ends. What Can I Do?The second-longest shutdown in history is leaving many federal workers with bills due and no paycheck to cover them. Here's what you can do to get by. 
- 
 Grant Cardone Tells Us the Biggest Retirement Mistake You Can Make Grant Cardone Tells Us the Biggest Retirement Mistake You Can MakeThe entrepreneur, real estate investor and motivational speaker tells us why people should never stop working. 
- 
 October Fed Meeting: Live Updates and Commentary October Fed Meeting: Live Updates and CommentaryThe October Fed meeting is a key economic event, with Wall Street waiting to see what Fed Chair Powell & Co. will do about interest rates. 
- 
 Will AI Videos Disrupt Social Media? Will AI Videos Disrupt Social Media?The Kiplinger Letter With the introduction of OpenAI’s new AI social media app, Sora, the internet is about to be flooded with startling AI-generated videos. 
- 
 The Delayed September CPI Report is Out. Here's What it Signals for the Fed. The Delayed September CPI Report is Out. Here's What it Signals for the Fed.The September CPI report showed that inflation remains tame – and all but confirms another rate cut from the Fed. 
- 
 What Services Are Open During the Government Shutdown? What Services Are Open During the Government Shutdown?The Kiplinger Letter As the shutdown drags on, many basic federal services will increasingly be affected. 
- 
 The Economy on a Knife's Edge The Economy on a Knife's EdgeThe Letter GDP is growing, but employers have all but stopped hiring as they watch how the trade war plays out. 
- 
 Banks Are Sounding the Alarm About Stablecoins Banks Are Sounding the Alarm About StablecoinsThe Kiplinger Letter The banking industry says stablecoins could have a negative impact on lending. 
- 
 Adapting to AI's Evolving Landscape: A Survival Guide for Businesses Adapting to AI's Evolving Landscape: A Survival Guide for BusinessesLike it or not, AI is here to stay, and opting out could be disastrous for your organization. Instead, focus on what you can control and be flexible, as AI is still evolving. 
- 
 These Stocks Dipped in 2025. Do They Have Value? These Stocks Dipped in 2025. Do They Have Value?If you are looking to add new long-term positions to your portfolio, as you should, this is the time to examine stocks that the market shuns.