US-China Rare Earths Crisis: Defense Supply Chains Under Pressure
Explore how the US-China rare earths crisis reshapes defense supply chains, with China’s export restrictions challenging US military readiness and contractors navigating a high-stakes mineral showdown.
Key Takeaways
- China controls over 90% of rare earth processing and magnet manufacturing globally.
- US defense contractors downplay immediate supply risks, citing stockpiles and alternative sources.
- New Chinese export rules block rare earths for defense uses, tightening global supply.
- US lags behind China in advanced weapons production, raising strategic concerns.
- Domestic rare earth mining investments aim to reduce US dependence on China.
Rare earth elements have quietly powered the backbone of US defense technology—from F-35 jets to precision missiles. But in April 2025, China flipped the script, imposing its strictest export restrictions yet on these critical minerals. This move threatens to choke off the US military’s access to essential components, sparking fears of a looming supply crisis.
Despite warnings that the US defense industry could be just weeks away from a rare earths crunch, leading contractors like Lockheed Martin and Northrop Grumman have publicly downplayed the threat. They point to stockpiles and proactive supply chain strategies as buffers against disruption.
This article unpacks the rare earths crisis, revealing the high-stakes tug-of-war between Washington and Beijing. We’ll explore China’s dominance, the defense sector’s response, and what this means for America’s industrial resilience in a world where minerals have become geopolitical weapons.
Understanding China’s Rare Earths Control
China’s grip on rare earths is nothing short of commanding. It controls about 70% of global rare earth mining, 90% of the separation and processing, and a staggering 93% of magnet manufacturing. This dominance isn’t just about numbers—it’s a strategic chokehold. In April 2025, China extended its export restrictions to cover even products containing trace amounts of Chinese rare earths or those made using Chinese technology, applying the foreign direct product rule (FDPR).
Imagine a gatekeeper who not only controls the gate but also the keys to every door beyond it. That’s Beijing’s position. Export licenses for defense-related applications, especially those linked to US military contractors, are now generally denied. This move weaponizes China’s mineral monopoly, turning rare earths into a geopolitical tool.
These controls build on earlier bans from late 2023, creating a layered web of restrictions. The result? A global ripple effect that tightens supply chains far beyond China’s borders, leaving the US and its allies scrambling for alternatives.
Rare Earths’ Role in US Defense
Rare earth elements aren’t just fancy minerals—they’re the lifeblood of advanced US weaponry. From the stealthy F-35 fighter jets to Tomahawk missiles and Virginia-class submarines, these materials enable precision, stealth, and power. Without them, the cutting-edge tech that defines modern defense would falter.
The US military-industrial complex already faces a tough race. According to the Center for Strategic and International Studies, China is ramping up weapons production at a pace five to six times faster than the US. This isn’t just a numbers game; it’s a strategic gap widening with every delayed shipment of rare earths.
The Government Accountability Office warned in 2024 that supply chain disruptions could severely harm national security. The reliance on Chinese mining and processing means the US’s most advanced systems are vulnerable to supply shocks—an uncomfortable truth that challenges the myth of American industrial invincibility.
Defense Contractors’ Stockpile Strategy
While headlines scream crisis, defense contractors like Lockheed Martin, Northrop Grumman, and RTX Corporation have taken a more measured tone. Their earnings calls reveal a strategy built on foresight and preparation. Lockheed Martin’s CFO stated the company has enough rare earth materials stockpiled to last through 2025, thanks to the long lead times in their supply chains.
Northrop Grumman’s CEO Kathy Warden emphasized proactive supply chain management, ensuring the company can continue producing critical electronics despite market uncertainties. This isn’t wishful thinking—it’s a calculated buffer against Beijing’s tightening grip.
Analysts suggest these firms have been quietly stockpiling for years, aware of the strategic risks. Additionally, recycling rare earths from retired military equipment offers another supply avenue. Still, this approach is a stopgap, not a permanent fix, highlighting the need for broader supply chain resilience.
US Efforts to Build Domestic Supply
Recognizing the vulnerability, the US government has stepped up investments to reduce reliance on China. Over the summer, the Department of Defense poured $400 million into MP Materials, which operates the only large-scale rare earth mine in the US. This stake aims to jumpstart domestic production and processing capabilities.
Beyond MP Materials, the government has taken equity positions in other mining ventures like Trilogy Metals and shown interest in Australian projects, signaling a push for allied collaboration. President Trump’s recent agreement with Australia’s Prime Minister Anthony Albanese underscores this strategic pivot.
These moves reflect a long game. Developing a robust domestic supply chain won’t happen overnight, but they mark a critical shift from dependence to self-reliance. For the US defense sector, this could mean turning a corner from vulnerability to strategic strength.
Navigating the Rare Earths Crisis Ahead
The rare earths crisis is a complex chess match with high stakes. China’s export restrictions are both a bargaining chip and a strategic weapon, forcing the US to rethink its supply chain and defense readiness. While contractors’ confidence in stockpiles offers some calm, experts warn that without rapid domestic development, the US remains exposed.
This tension also highlights a broader truth: global supply chains are fragile webs, easily disrupted by geopolitical moves. The US must balance immediate mitigation with long-term investments in mining, processing, and recycling.
For investors and policymakers, the lesson is clear—rare earths are no longer just minerals; they’re strategic assets shaping the future of defense and economic power. Staying ahead means embracing innovation, collaboration, and resilience in the face of uncertainty.
Long Story Short
The rare earths crisis is more than a trade dispute—it’s a test of US national security and industrial grit. China’s near-monopoly on mining, processing, and magnet manufacturing gives it a powerful lever to influence global defense supply chains. While defense contractors’ confidence in stockpiles offers short-term relief, it’s clear that long-term solutions require building domestic capacity and diversifying sources. The US government’s recent investments in rare earth mining companies and international partnerships signal a strategic pivot toward supply chain independence. Yet, these efforts will take years to bear fruit, underscoring the urgency of the moment. For investors, policymakers, and defense planners alike, the rare earths saga is a vivid reminder: in today’s interconnected world, even the smallest mineral can tip the scales of power. Staying informed and proactive is the best defense against the unpredictable tides of global trade.