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Not long ago, the US Treasury Secretary came back from South Carolina displaying a small piece of metal, declaring it was the first rare-earth magnet manufactured in the US in a quarter of a century.

He remarked that this was a sign the US is breaking “China's dominance on our supply chain.” Thanks to a new rare-earth mineral refining facility in the state, he noted, “We’re finally becoming independent again.”

Challenging Beijing's Control in Essential Minerals

Overthrowing Beijing's processing and manufacturing dominance in these materials, which are vital for advanced electronics, batteries, and military equipment, is a key goal for the federal government. Using trade measures and other approaches, the US is counting on returning the industry back to American shores.

Such tariffs prompted China to limit rare-earth exports to the US and pushed the administration to sign deals with Australia, a partner, Cambodia, and Japan.

Although the US and China have now brokered a trade truce on rare earths, Beijing—with approximately 70% of worldwide extraction and nearly all of global processing capacity—holds an advantage that will be difficult to diminish.

“Rare earths are essential for EV engines but also in defense technology that have obvious applications for the defense department,” says an industry expert. “Anything that has a decent magnet in it requires rare earths.”

Challenging Path for American Self-Sufficiency

It won't be simple for the US to reduce its dependence on imports from China of materials essential to defense, chip manufacturing, and the shift from traditional energy to wind and solar. Data from official sources, the US imported the vast majority of the rare earths it consumed in recent years.

For some rare-earth minerals such as dysprosium, used in semiconductors, and samarium, critical for military applications, Chinese refinement dominance rises to 99%. Dysprosium and terbium are found in magnets essential for EV motors and generators in wind turbines, along with applications for mobile devices, advanced lighting, and energy plants.

Extended Timelines and Global Deposits

Efforts to cut the US’s reliance on Chinese production of rare-earth minerals could take years. Analysts point out that “Rare earths” is not entirely accurate because they’re not that uncommon in the earth’s crust, but many reserves, such as those in Ukraine, where a deal was made earlier this year, are only in the early stages of mining.

“It’s not that there’s a shortage itself, it’s that Beijing can limit how much is exported,” an analyst explained, noting that obtaining permits from China can be a complex and time-consuming endeavor.

The Arctic region, a key area of American interest, and Brazil, are two other countries with significant rare-earth resources. Domestically, there are reserves in the West, the Midwest, and the central US, with the largest operational mine operating at Mountain Pass, California, not far from Las Vegas.

Federal Efforts and Investment

In July, the US Department of Defense became the largest shareholder in an industry operator, with intentions to open a new “integrated” plant, called a new facility, to make magnets crucial for F-35 fighter jets, drones, and naval vessels.

Across the continent, measured and indicated resources of rare earths were estimated to include millions of tons in the US and more than 14m tons in the northern neighbor—significantly lower than the vast reserves believed to be in the Asian giant.

Following government funding in other sectors and US chipmakers, the federal agency said it was prepared to make targeted funding in strategic resource firms.

“You’re competing against government-backed investment because Beijing is selecting these as priority areas that they aim to control,” a cabinet member stated during a address in April.

He suggested that the US could use a sovereign wealth fund to accelerate production. “How could the richest nation in the world not possess the largest state investment fund?” he asked.

Past Challenges and Future Outlook

American attempts to support domestic production have struggled in the past when Chinese producers lowered prices, rendering unsupported rare-earth development uneconomic against China’s lower cost of production and far-sighted planning.

In the past, a market expert testified before a congressional panel that “nations that fund in battery capacity and industrial networks now are likely to dominate this sector for generations to come. There is still time for the US but immediate steps are required.”

Since then, a scramble to build trading alliances around rare earths is speeding up.

“In about a year from now, we’ll have so much essential resources that supply will exceed demand,” the President informed the media. That came eight months after a request for compensation in the form of minerals from Ukraine. More recently, the government of Pakistan signed a deal with an American company, giving it access to minerals such as antimony and copper.

Prospects for Success

But, can the US make up its gap and loosen China’s hold on rare-earth supply chains? “America has implemented major measures so far,” a specialist comments. The nation, he continues, cannot be “independent in the short term because it requires years to start operations and establish processing plants.”