In the 1950s, America dominated the rare earth mineral market. In 1952, the Mountain Pass mine in California supplied the vast majority of rare earth minerals in the world, and well into the 1980s, output from the mine commanded metal markets.
Then China entered the rare-earth minerals game, making huge investments in mining and processing. "As environmental regulations tightened and costs rose in the U.S., China began dominating the market through a mix of cheap labor, lax standards, and aggressive industrial policy," writes Shawn Regan in City Journal.
It wasn't until the early 21st century, when the demand for rare earth metals skyrocketed, that the U.S. realized the perilous state of its supply.
Mountain Pass closed in the early 2000s, but reopened in 2018. It now accounts for about 10% of the world's rare-earth mineral supply. We're still importing 70% of minerals from China and 90% of rare-earth refining and magnet production. But a massive effort is underway that is looking to change that equation.
The problem is a familiar one: The massively complex permitting process to open a mine anywhere in the United States stretches the timeline from discovery to production to decades. "One recent analysis found that the U.S. has the second-longest mine-development timeline in the world, lasting nearly 29 years from discovery to production, on average," writes Regan. "Only Zambia takes longer."
Even when a project gains approval, it can get tied up in courts for years, usually over inane, even silly lawsuits. For example, "in Nevada, two lithium projects have faced a series of regulatory and legal obstacles, including a dispute over whether one of the mines will affect a nearby species of rare desert buckwheat," according to Regan.
Meanwhile, China digs and processes 90% of all rare earth metals used in everything from jet planes to smartphones.
Rare earths belong to a larger family of critical minerals, including lithium, nickel, cobalt, and graphite, that underpin everything from batteries and semiconductors to satellites and renewable energy systems. Mining these materials often carries a significant environmental toll. Yet together, they are as vital to the twenty-first century as steel and oil were to the twentieth. Unlike oil, however, they are controlled very little by America.
The irony is that the emergence of renewable energy and other green technologies in the United States has made mining these materials more important. Electric vehicles require six times more mineral input than a conventional car. A single wind turbine contains hundreds of pounds of rare-earth magnets. According to the International Energy Agency, global demand for critical minerals could double by 2030, driven largely by increased electricity demand. The new economy is not postindustrial; it’s just built on a different kind of mining.
China's status as the world's primary source of rare earth metals has emboldened it to throw its weight around in international trade. The dispute with Donald Trump over tariffs disrupted supply chains and frightened the markets. Trump imposed 100% tariffs on Chinese imports to America in response to Beijing's announced export-license requirements for more rare-earth elements and for any products that contain more than 0.1 percent of them. These were enormously complicated licensing requirements and could have led to a major trade war. Fortunately, President Xi backed down and delayed the export licensing for a year in exchange for a partial reduction in U.S. tariffs. The battle isn't over yet.
“The problem for Beijing is that the more it rolls out the big guns of export restrictions on critical minerals, the more it encourages the Western world to bite the bullet and build alternative supply chains,” commodities expert Clyde Russell recently wrote. “China doesn’t even have to fire the cannon, the repeated threat of doing so will be enough to spark the necessary Western investment.”
China had no desire to modify its campaign to maintain its dominance in rare earths because it barely comprehends the speed with which capitalism can adapt to its challenges.
Securing rare earths doesn’t mean we need to mine and refine every ounce we consume. Rather, we should diversify enough so that China can’t cut off critical supplies. Analysts suggest reducing reliance on China from 90% to 60 or 70% would be sufficient to meet essential needs, such as national security. That’s achievable without permanent subsidies or sprawling state intervention.
China’s grip on rare earths endures only as long as it keeps them cheap and available. The risk lies in Washington creating an industrial policy that steadily — and indefinitely — expands the government’s role in private markets.
Competing with China does not require copying its state-capitalism playbook. It requires reforming permitting, forging partnerships and using stockpiles judiciously — while letting competition and innovation do the rest.
Trump has invested $12 billion in taking stakes in mining companies, not just in the U.S. but around the world. In the next two decades, those mining stakes should pay off handsomely, leaving China as a secondary player in the rare earths market.
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