Rare earth elements (REE) have been a key subject of geopolitics in recent years, and in 2025, they are a more pressing topic than ever. But what is it that makes them so rare? In fact, the 17 elements known as “rare earth” are extremely common in the Earth’s crust. However, they require a difficult process to be extracted and only a few countries own the technology needed to obtain them, which has led the world to be dependent on China’s REE exports. But what if China decides to use it as a geopolitical weapon?
REE are essential materials of technological industries. They make up the components of more than 200 high-tech products, such as cellphones, computer hard drives, electric and hybrid vehicles, and televisions. They also play a significant role in the defence industry for radar, laser, sonar, and guidance systems. Therefore, they are extremely attractive and necessary for countries with a strong technological market and for countries that are investing in defence: two of the most important sectors in the geopolitics of this century.
The biggest producers of REE in 2023 were China (68.6%), the United States (12.3%), and Myanmar (10.9%), the latter exporting almost all of its production to China. Despite the US having a relatively high production compared to other countries around the world, it is not enough to fulfil its internal demand, leading it to be dependent on China’s REE exports. In fact, 80% of the US REE consumption in 2024 relied on imports, and 77% of these imports were from China. Companies such as Tesla and Apple are examples of American companies that rely on Chinese REE in their supply chain. Other key sectors affected were the aerospace and defence industries, which faced delays in production.
However, in April 2025, China restricted the exports of REE as a response to Donald Trump’s tariffs with what was supposed to be a temporary negotiation toll. The restriction left the US government and manufacturers bereft, seeking new sources. It was placed on both mined minerals and permanent magnets, and targeted seven minerals known as heavy REE, which are crucial for the defence sector.
Heavy REE are harder to process and are more valuable than other REE, and the US does not possess the technology to process them. This leaves China with a disproportionate advantage and establishes the country as a quasi monopoly in the REE value chain.
Further monopolising the sector, China has made it mandatory for all companies to get export licenses in order to keep exporting any REE, making it possible for them to track and stop any REE exportation process. While these general restrictions apply to all other countries, according to Mel Sanderson, director at American Rare Earths, the list intentionally targets the US by including elements crucial to the nation’s economy. Additionally, China imposed specific bans on exports of three metals to the US.
However, the United States has not remained idle. The national security strategy has made it a priority to diversify its REE suppliers, as exemplified by the recent deals with Australia, Cambodia and Japan, as well as current talks with Ukraine and Brazil. This is not even to mention the nation’s keen pursual of Greenland. Moreover, the US has been investing in research to develop its own technological capabilities to extract and process REE. However, it would be highly costly and time consuming to reduce imports from China, given the country’s tight control of the sector. China agreed to resume exporting REE to the United States last June, on the condition that the US would progressively decrease its tariffs levied on Chinese imports. The relaxation of tensions gave the US and China time to diversify their partners and temporarily ease the pressure on their markets.
The geopolitical tensions surrounding rare earth elements exemplify the importance of diversifying suppliers. The difficulty of acquisition and processing of the materials make an aggressive approach, such as the one the US chose to take, a cautionary tale of how policy approaches can lead to internal economic damage. Specifically, Donald Trump’s tariffs on China had detrimental consequences on the US domestic market, due to the interconnected nature of the REE network. Furthermore, these developments bring new actors to the geopolitical chess board, as third countries, especially those holding significant REE resources, establish themselves as potential partners. The race for global resources between the great economic powers has grown extractive and aggressive, with REE at its centre.
Written by Maria Cerdeira Toffano, Edited by Hannah Shaffer
Photo Credit: Shane McLendon (Uploaded 27 January, 2018) on Unsplash
