China has a grip on the United States

The United States and the rest of the world are dependent on China for rare earth minerals that power our defense industry and tech sector. These minerals are used for our weaponry, semiconductors industry and everyday life consumer products including phones and electric vehicles. China not only dominates the market with its reserves of such minerals but more importantly with the processing to achieve finished products. China’s control over about 90% of the rare mineral processing market will not change for a long time. The United States intends to diversify, but it takes as much as 29 years for a U.S. mine to obtain permits to operate, and the processing to a finished product creates tremendous objectionable environmental consequences and is costly. There is only one operating rare earth mine in the United States and our government recently invested $400 million in it.

China’s monopoly is intentional and fueled by subsidies that make it near impossible for potential competitors to enter the marketplace. That stranglehold provides tremendous leverage, which China is not shy about using. For example, when last year Japan Prime Minister Tanae Takaichi merely uttered the words that a China blockade of Taiwan would cause a “survival situation for Japan” justifying potential use of Japan’s Self-Defense Forces, China cut off Japan’s supply of rare earth minerals for two months. President Xi has long made clear his intentions regarding Taiwan, reportedly telling President Trump in a phone call last November that “Taiwan’s return to China is an integral part of the postwar international order. “

It is clear as well that in October of last year, the Trump administration was forced to moderate its punitive tariff policy toward China because of its ability to restrict the export of finished rare earth minerals. According to a November 2025 Morgan Stanley report, China dialed back its restrictions on rare earth exports but in a way that “keeps a calibrated choke point in place” that enables both sides to maintain an equilibrium whereby the United States receives rare earths and China receives U.S. chips.

The U.S war with Iran has only given China additional leverage. According to reporting from the South China Morning Post, as of March the United States had only two months inventory of rare earth minerals and asserted that the U.S. reliance on China “means China could dictate how long U.S. strikes on Iran can go on” in addition to leverage regarding other “conflicts.” Politico reports that with Iran’s missile and drone strikes on missile defense systems at seven U.S bases in the Mideast, the resulting defensive response has rapidly depleted U.S. supplies, which will take years to rebuild.

As the United States seeks to wean itself from dependence on China, its work with allies to diversify is hampered by the transactional nature of U.S. policy and doubts about the U.S. ongoing commitment to anything it agrees to. To the extent the administration works with our domestic industry for both mining and processing, it has an uphill battle. The United States needs to reassure allies of a common interest in independence from China, and encourage private industry to make long-term investments which in the current environment, will need government subsidies and guaranteed purchases.

Jim Hartnett, Navy veteran, attorney, strategic consultant. Graduate of Sophia University International Division (Tokyo) and holder of a Certificate in Public Policy from the Harvard Kennedy School.