What Are Rare Earth Elements and How Are They Fueling US-China Trade Tensions?

A recent announcement from China could intensify U.S.-China trade tensions. On October 9, China declared tighter controls on rare earth element exports. This policy requires permits for exporting 12 specific elements and related technologies, allegedly in response to U.S. tariffs on Chinese products imposed in April.

Understanding Rare Earth Elements

Rare earth elements, or REEs, consist of 17 metals including scandium, yttrium, and the lanthanides. Despite their name, these elements are more abundant than gold in the Earth’s crust. However, extracting and refining REEs is challenging, costly, and environmentally harmful. Consequently, only a few countries dominate their supply.

The Role of Rare Earths in Technology

REEs are crucial in various modern technologies. They are used in products ranging from smartphones and wind turbines to electric vehicle batteries and cancer treatment tools. For the U.S. military, their significance is even greater.

• F-35 fighter jets
• Submarines
• Satellites
• Tomahawk missiles
• Military lasers

These all rely on rare earth components, making them indispensable for defense purposes.

China’s Strategic Advantage

According to the International Energy Agency (IEA), China accounts for 61% of global rare earth production and controls 92% of refining processes. There are light and heavy categories of REEs, with heavy ones being rarer. The U.S. has only one operational mine in California, and it has depended heavily on China for refining. Between 2020 and 2023, 70% of U.S. rare earth imports were from China.

Gracelin Baskaran, Director of Strategic Mineral Security Program at CSIS, noted that China might leverage this dependence as a strategic weapon. This viewpoint is supported by the U.S. Geological Survey (USGS) data indicating major import reliance.

Escalating Trade Tensions

The new restrictions were announced ahead of the APEC summit, where U.S. President Donald Trump and Chinese President Xi Jinping were expected to meet. The timing suggests a potential escalation in trade tensions. This is not the first such incident this year. Earlier measures from Beijing led to Trump’s reaction on Truth Social, accusing China of breaching trade ceasefire terms by restricting the export of seven REE types and related products.