US Pushes Diversification Amid China's 80-90% Rare Earth Processing Control

Washington D.C. – The United States is intensifying its efforts to reduce reliance on China for critical rare earth elements, which are vital for advanced technologies and national defense. These strategic minerals, predominantly processed by China, have become a focal point in global trade discussions and national security strategies, prompting significant investment in alternative supply chains.

As of late 2024 and early 2025, China maintains an estimated 80-90% control over the world's rare earth processing capacity, extending its near-monopoly beyond mining to crucial separation and refining stages. This concentration poses considerable economic and national security risks for nations dependent on these materials, as highlighted by a 2025 Brookings Institution analysis. The Congressional Research Service (CRS) also outlined the dual-use nature of rare earth elements, underscoring their importance for both commercial and defense sectors.

In response, the U.S. government has actively pursued a multifaceted strategy, including domestic production incentives, international partnerships, and investments in processing facilities outside of China. A senior U.S. official stated in September 2024 that these efforts involve projects in allied nations like Australia and Europe. The Pentagon has also continued to back domestic and allied rare earth mining and processing initiatives throughout 2024 to secure a reliable supply for defense applications.

The strategic imperative to diversify the rare earth supply chain remains a consistent theme in policy discussions, marked by escalating trade actions. In December 2023, China's Ministry of Commerce prohibited the export of rare earth magnet technology and equipment, impacting key production processes. Subsequently, in May 2024, the Biden administration announced a 25% Section 301 tariff on all imports of permanent magnets containing rare earth elements from China, set to take effect in 2026.

Bloomberg Opinion, commenting on the broader trade landscape, stated, > "Whatever comes out of Trump-Xi trade talks, the US needs to make a concerted effort to break China's stranglehold on rare earths." This sentiment reflects ongoing concerns about geopolitical leverage and the need for resilient supply chains, especially with market participants bracing for potential broader tariffs under a future U.S. administration. Despite these efforts, the 2025 global rare earth market report indicates China's continued leadership in the short to medium term due to its established infrastructure and cost advantages.