“People who live in glass houses should not throw stones.” That’s a saying that President Trump should have taken to heart before slapping aggressive tariffs on Chinese imports, because China has one thing that the US lacks and needs: rare earth minerals. These minerals are necessary components of high-tech equipment like automobiles, robots, and military equipment.
China mines about 70% of the world’s rare earth minerals, and it processes about 90% of them. In the wake of Trump’s tariffs, China began to require exporters of rare earths to get licenses to sell their goods internationally, and those licenses have been slow to come when they’ve come at all.
So the exports of these minerals from China have slowed to a crawl. There’s a growing concern that global auto manufacturers will have to pause production if they can’t get their hands on enough magnets made from rare earth minerals. The US is left to depend on a small company, MP Materials, to boost the production and processing of rare earth minerals domestically.
President Trump understandably is upset about the situation, and Secretary of State Marco Rubio countered China’s moves by announcing plans to cancel the visas of Chinese students inside the US. China’s response: Calling Harvard a “party school” and touting its own universities. Chinese AI company DeepSeek expressed pride that its founders were educated in China.
Such ridiculous tit-for-tat among world powers could easily have been avoided. The US government has long known that America’s dependence on China for rare earth minerals was a problem, but it never acted on the recommendations of the studies it had commissioned.
Most recently, the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party, established in 2023, warned in a December 12, 2023, report that the US was too dependent on China for rare earth minerals. Here are some of its suggestions that the US should have heeded:
(1) Identifying the problem. Robert Lighthizer, US Trade Representative during President Trump’s first term, explained to the committee how the US and much of the world were dependent on China for numerous critical minerals and their refining and processing.
China has leveraged its industrial policy—including economic controls, trade protectionism, low environmental standards, and technology transfer—to solidify its indispensable positioning. The committee believed that China would use its position as leverage in a prospective conflict with Taiwan.
“Congress must decrease the United States’ reliance on the PRC [People’s Republic of China] for these critical materials,” the report concluded.
(2) Concocting a plan. The report also recommended creating a reserve of rare earth minerals to insulate US producers from price volatility and the US government from the PRC’s prospective weaponization of the minerals. In the event that China were to flood the market with these materials, the US reserve could purchase the excess and stabilize the prices. Having such a price stabilization mechanism in place would entice more US companies to enter the rare earth mining industry.
The report suggested that Congress and the executive branch work to source these minerals from countries that are friendly to the US and that they create incentives, like tax breaks and prizes, to encourage domestic manufacturing. It recommended that the Commerce Department investigate whether dumping or other practices that distort the market for rare earth minerals and magnets are going on, in which case the department should impose “material injury tariffs.”
Also recommended: Increasing recycling programs of government-owned products that have rare earths or magnets in them, working with colleges to increase the number of workers with the skills necessary to build a rare earth minerals industry, and studying deep seabed mining and its impact on the environment.
The report concluded: “Never before has the United States faced a geopolitical adversary with which it is so economically interconnected. … The United States now has a choice: accept Beijing’s vision of America as its economic vassal or stand up for our security, values, and prosperity.”
Again, that report was dated December 12, 2023! Did Peter Navarro (a.k.a. Ron Vara), Trump’s Senior Counselor for Trade and Manufacturing, read the report before he recommended that the President start a trade war with China?