The United States is struggling to break its dependence on Chinese rare earths, even as Beijing tightens its control over the critical minerals that power everything from fighter jets to electric vehicles. The latest push for supply chain independence has hit repeated setbacks, leaving defense contractors and EV makers exposed to a supplier that shows no sign of loosening its hold.
Why the US push keeps coming up short
Washington has spent years trying to build a domestic rare earth industry, from mine to magnet. But the results have been slow and patchy. China still dominates the global supply chain, controlling not just mining but the complex processing and refining steps that turn raw ore into usable metals. That's where the real bottleneck lies.
One after another, US projects have run into cost overruns, technical hurdles, or financing gaps. The Trump administration made rare earth independence a priority, but progress has been uneven. A handful of mines have opened or expanded, yet the downstream capability to separate and process the elements remains almost entirely overseas.
Defense and EVs feel the squeeze
The stakes are highest in defense. Rare earths go into precision-guided munitions, night-vision goggles, radar systems, and the permanent magnets in electric motors for submarines and drones. Without a reliable domestic source, the Pentagon remains dependent on Chinese exports for many of these components.
The electric vehicle industry is in a similar bind. EV motors rely on neodymium and dysprosium magnets, and most of the world's supply comes from China. Automakers and battery makers have been scrambling to line up alternative sources, but few have managed to lock in enough supply outside China to meet their long-term needs.
China's tightening grip
Beijing has not been idle. In recent months, China has moved to consolidate its control over rare earth exports, imposing new licensing requirements and stepping up oversight of its domestic producers. The effect is a market that is harder for foreign buyers to navigate, with more uncertainty about availability and price.
China's leverage is not just about raw materials. It also controls the refining technology and the intellectual property for making high-performance magnets. Even if the US builds more mines, it still has to ship the ore somewhere to be processed — and that somewhere is usually China.
The latest setbacks have been particularly visible. A proposed US-based processing facility has faced repeated delays, and a planned magnet plant has struggled to secure enough feedstock. Meanwhile, China's own output continues to expand, and it has been willing to use export controls as a political tool.
What's left on the table
There are a few bright spots. The US has stockpiled some rare earth materials, and the Pentagon has funded research into recycling and alternative magnet designs. But these are partial fixes, not a replacement for a full supply chain.
Congress has weighed in with funding for research and development, but turning that money into working mines and processing plants takes years. The private sector is also investing, but companies are wary of committing billions to a market where China can flood the market and undercut prices at will.
The administration has pushed allies like Australia and Japan to join the effort, and some joint projects are in the works. But none of them are close to replacing the volume of Chinese supply that the US and its partners currently rely on.
For now, the gap between ambition and reality remains wide. The next test comes with the release of the Pentagon's annual assessment of critical mineral vulnerabilities, expected later this year. That report will show whether the US is any closer to breaking free — or whether China's grip is only getting tighter.
