US Rare Earths Reliance on China to Loom Over Trump-Xi Talks
Trump meets Xi with rare earths high on the agenda, as US production grows but dependence on Chinese supply persists into the 2030s.
When President Donald Trump sits down with Chinese counterpart Xi Jinping on Thursday, rare earths will be high on the agenda — and the balance of leverage is not in Washington's favour.
Rare earths are among the 60 minerals the US government classifies as critical. They must be processed before they can be turned into magnets and other components used in weapons, automobiles, computers and a wide range of other goods.
US output of the two most commonly used rare earths has more than tripled since Trump returned to office, yet the country can still meet only 42% of its own demand. According to data from minerals consultancy Benchmark Mineral Intelligence, it will continue to import nearly a quarter of what it needs five years from now.
China remains the world's dominant miner and refiner of rare earths. It agreed last year to delay export restrictions until November 10, and whether that delay is extended is expected to be on the table in Washington. The White House had set a January 2027 deadline to block imports of Chinese rare earths — a target that now appears all but impossible to hit.
"The goal isn't for the US to replace China as the dominant global supplier," said Coco Zhang, an analyst at ING. "The more realistic objective is to build a meaningful alternative supply chain that can protect strategic sectors during periods of geopolitical disruption."
Since returning to office, Trump has treated rare earths as a national security priority, directing billions of dollars towards MP Materials, USA Rare Earth, Energy Fuels and others in an effort to loosen China's grip. Those investments are beginning to show results, but the continuing need for imports highlights both the weakness of Trump's bargaining position and the difficulty of rebuilding an industry the US largely abandoned in the late 20th century.
"We have to build this properly with urgency," said Kunal Sinha, founder of minerals processing startup Valor. "And when we build this up, we will be able to meet that demand."
The challenge is particularly acute in heavy rare earths used for military applications, which the US barely processes at all. Benchmark data suggests output of those specialised minerals will rise by 2031 but will still fall short of demand.
Processing has proved hard to master because of the chemical and mechanical difficulty of separating the 17 rare earths from one another.
"Western countries are in a stronger position to reduce their reliance on China, but replacing Chinese supply across the full value chain is much more difficult," said Todd Downing, a minerals analyst at consultancy Project Blue.
US companies are nonetheless expanding. MP Materials began this month delivering magnets made from its own refined rare earths to General Motors under a deal signed in 2021. USA Rare Earth has gone on an acquisition spree since receiving government investment, buying a Brazilian mine and a French processing plant. Energy Fuels agreed earlier this year to acquire a company that had built a major magnet facility in South Carolina.
"Rare earths domestic onshoring is moving forward," said Tim Moore, a rare earths analyst at Clear Street. "It's early innings, but it's happening."
Startups including Nth Cycle and Ucore Rare Metals are experimenting with new refining methods. "The US continues to make a lot of rapid progress in developing our capacity to produce materials across the supply chain," said Albert Gore, head of the electric vehicle trade group ZETA. EV makers are among the largest users of rare earth magnets.
Even so, some Chinese suppliers have begun withholding shipments to the US for fear of offending Beijing — a trend that could pose a wider threat to American manufacturers if Xi formally blocks exports. Ford Motor temporarily shut US factories last year after supplies of Chinese rare earths dried up.
"We are all working very hard to stand up the processing capacity as quickly as we can," said Megan O'Connor, chief executive of Nth Cycle, which says its technology can process rare earths and this week signed a $1 billion supply agreement with Glencore.