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The Hidden Battlefield of Modern Technology
Think your smartphone is just plastic and metal? Think again. Hidden inside that device are seventeen elements with names like yttrium and dysprosium – rare earth minerals that make your touch screen responsive and your speakers crisp. But these same materials are now becoming the ultimate weapon in the escalating trade war between Donald Trump and China. Between 2020 and 2023, the US relied on China for 70% of its imports of all rare earth compounds and metals, according to a US Geological Survey report this year. When you control the materials that power everything from iPhones to F-35 fighter jets, you hold tremendous leverage. China knows this – and they’re starting to squeeze.
China’s Iron Grip on the Global Supply Chain
In 2023, China’s production quota of rare earths accounted for nearly 70 percent of global production. But that number doesn’t tell the whole story. The International Energy Agency said 61% of mined rare earth production comes from China, and the country controls 92% of the global output in the processing stage. It’s like owning not just the oil wells, but every refinery too. In 2023, China had a mine production of some 240,000 metric tons of rare-earth oxide. Meanwhile, the United States extracted some 43,000 metric tons of rare earth mineral concentrates in 2023, as well as 250 metric tons of rare earth compounds and metals. The gap is staggering – and it’s getting bigger.
The Pentagon’s Million-Dollar Dependency Problem
Every piece of advanced military hardware tells the same story of dependence. Each F-35 contains more than 900 pounds of rare earth elements, which are crucial to targeting, communications, and other systems. An Arleigh Burke DDG-51 destroyer requires 5,200 pounds; and a Virginia class submarine needs 9,200 pounds, according to a March Pentagon news story. These aren’t optional add-ons – they’re the nervous system of America’s most sophisticated weapons. The Defense Department (DoD) uses rare earth elements for a variety of purposes in its weapon systems – in radar, guidance systems, precision-guided munitions, lasers, satellites, and equipment including night vision goggles. Without these materials, a $80 million F-35 becomes an expensive paperweight. 88% of DoD’s critical mineral supply chains are exposed to Chinese influence. That’s not just a vulnerability – it’s a national security nightmare.
America’s Scramble to Break Free
Since 2020, the US Department of Defense has awarded more than $439 million to establish domestic rare earth element supply chains. But money alone can’t solve decades of neglect overnight. The United States has only one rare earths mine and most of its supply comes from China. That mine, Mountain Pass in California, is like trying to fill the Pacific Ocean with a garden hose. Even when these facilities are fully operational, MP Materials will only be producing 1,000 tons of neodymium-boron-iron (NdFeB) magnets by the end of 2025—less than 1 percent of the 138,000 tons of NdFeB magnets China produced in 2018. The math is brutal: America needs years, maybe decades, to build what China already has. Developing mining and processing capabilities requires a long-term effort, meaning the United States will be on the back foot for the foreseeable future.
The Economic Shockwave Already Hitting Defense Contractors
Wall Street is already feeling the tremors. Shares of NioCorp fell 8.1% on Friday, while shares of USA Rare Earth (USAR.O), opens new tab, which is building a rare earth magnet facility in Oklahoma, jumped 20%. But the real damage goes deeper than stock prices. Prices for gallium-containing parts jumped 6% within three months of the bans; antimony parts rose 4.5%, while all other DoD parts rose just 1.4%. America’s only rare earths mine has fielded calls from anxious companies since China responded to President Donald Trump’s tariffs by limiting exports of seven heavy metals. Panic buying is already starting, and when companies start hoarding materials, prices spiral out of control. The U.S. Geological Survey estimated that a total ban on certain rare earths could cost the economy billions, a figure that doesn’t account for defense disruptions. The Pentagon’s modernization, from hypersonics to cyber warfare, assumes access to these materials. Without them, America’s military edge starts crumbling.
The Long Game: Who Really Wins This War?
Trump seems to have miscalculated the balance of forces in his trade war. When China is America’s only source for so many things — iPhones and minerals are only two examples — it can retaliate against tariffs in ways that hurt. China didn’t build this monopoly overnight – they played a thirty-year game while America slept. During that time, China combined its low labor costs and relatively lax environmental standards with the adoption of foreign technologies, according to Stan Trout, founder of the rare earths and magnetic materials consultancy Spontaneous Materials. Now Beijing holds all the cards. Experts and industry insiders said China’s export controls have left the rest of the world with very limited alternatives. America can threaten all the tariffs it wants, but when you need materials only your opponent can provide, who’s really in control? China has been able to maintain dominance of the industry thanks to its economies of scale, government subsidies, and its accumulation of massive stockpiles that have allowed it to undercut competitors with “irrationally low prices”, said Neha Mukherjee, a senior analyst for critical minerals at Benchmark Mineral Intelligence. The question isn’t whether America can break free – it’s whether it can do so before China’s grip becomes permanent. Did you expect that rare rocks buried in the earth would become the ultimate weapon in the world’s biggest trade war?
