Rare earth elements are critical for modern technology, including U.S. military hardware like F-35 jets and Virginia-class submarines. China currently dominates the sector, handling approximately 91% of global separation and refining of these materials as of 2024.
The U.S. government has committed over $7 billion since April 2025 to rebuild domestic production capacity. This includes a $400 million investment by the Pentagon in MP Materials for a 15% stake and a $277 million grant plus a $1.3 billion loan for USA Rare Earth.
China has utilized export controls as geopolitical leverage. In October 2025, Beijing introduced measures requiring licenses for products containing 0.1% or more of Chinese-origin rare earths. While some controls were suspended until November 10, 2026, following diplomatic talks, others remain active.
Supply chain disruptions have already impacted major U.S. manufacturers. In May 2025, Ford was forced to idle its Chicago assembly plant for one week due to a shortage of magnets, resuming production only after receiving approval from Beijing.
In June 2026, China placed 10 U.S. companies on an export control list, including MP Materials and USA Rare Earth. These firms are now restricted from purchasing goods with dual-use applications, complicating efforts to establish a domestic mine-to-magnet supply chain.
