Weighty element: how China's refusal to supply rare earth metals will affect the United States

Rare earth metals are critical for the production of radar systems, satellites and precision weapons — stopping the export of such elements will severely affect the US military industry, experts interviewed by Izvestia believe. Right now, Donald Trump intends to protect America's economy, but in the end, the United States can only become more vulnerable. Another industry that may suffer is space, in particular, restrictions will affect one of the main assets of Elon Musk, Space X. All this will only strengthen the split within the White House regarding the further conduct of the trade war. What levers of pressure Washington and Beijing have left is in the Izvestia article.

Why did China decide to stop exporting rare earth metals

China has decided to suspend exports of a wide range of rare earth metals (REM) and magnets amid a trade war with the United States, The New York Times reported on April 13. According to the newspaper, Beijing's actions threaten to cut off the supply of components that are important for the automotive and aerospace industries, semiconductor companies and military contractors around the world.

Experts interviewed by Izvestia claim that such a restriction would cause significant damage to the US economy, in particular, the military industry.

— Rare earth elements — neodymium, praseodymium, samarium and dysprosium — are key components for the production of miniature but powerful magnets necessary for the operation of engines, generators, radars, laser systems, missile guidance and satellite technologies. For example, neodymium magnets are used in electric motors of drones, F-35 fighter jets and submarines. Without these magnets, factories in Detroit will also not be able to produce drones, rockets and robots," explained Vladimir Chernov, analyst at Freedom Finance Global.

He clarified that the creation of alternative supply chains or the development of new replacement technologies will take a significant amount of time — from five to 10 years — and investment, and this will temporarily weaken the US position in the field of defense.

Why Rare Earth Metals can Increase Discord in the White House

The economic consequences of China's refusal to supply rare earth metals are broader — in addition to the military sphere, electronics, electric vehicles, and the renewable energy sector (RES sector), where they are used in batteries and engines, Pavel Sevostyanov, associate professor of the Department of Political Analysis and Socio-Psychological Processes at Plekhanov Russian University of Economics, drew attention.

The United States, which depends on 80% of Chinese imports in this area, will face rising costs and the need to urgently look for alternatives, such as resuming production on its territory or in allied countries such as Australia or Canada, Pavel Sevostyanov added.

The space sector may become another affected industry due to restrictions on the supply of rare earth metals, independent expert Andrey Barkhota added. One of the largest companies in it is Space X, owned by billionaire and Trump confidant Elon Musk. This could further fuel an internal confrontation between powerful people in the United States.

Elon Musk has repeatedly spoken out against the introduction of duties. His criticism fell not so much on Donald Trump as on White House trade adviser Peter Navarro, who is called the main initiator of protectionism in the US administration. Elon Musk publicly condemned him on his social media. He, in turn, noted that there was no tension between them.

Why the US is chasing Rare Earth metals

Rare earth metals are one of the few industries where resource security is of considerable importance, Andrei Barkhota noted. Achieving the required volumes of high—tech products depends on their availability - such chemical elements are used in the production of batteries and electronic components.

In 2024, the United States imported 80-85% of the physical volume of pure rare earth metals and their compounds directly from China, Pavel Pavlov, senior researcher at the Center for International Trade Studies at the Presidential Academy, drew attention. He added: currently, China's share in global exports of pure REM reaches 86%, and rare earth metal compounds — 30%, so Chinese supplies are poorly replaceable.

— The shortage of rare earth metals or the dependence of the United States on external suppliers, especially China, creates a vulnerability that can be exploited in geopolitical games. Therefore, the United States is actively seeking to strengthen its position in this area by investing in the development of deposits, technology development and the search for alternative solutions, such as cooperation with Ukraine or the Russian Federation in the field of their extraction," said Vladimir Chernov, analyst at Freedom Finance Global.

He explained: This is not only an economic issue, but also a matter of national security, which is becoming increasingly closely linked to access to critical resources.

However, Russia could replace the falling supply volumes of rare earth metals for the United States, but there are many barriers in this situation, said independent expert Andrei Barkhota.

— China may limit supplies, threatening to symmetrically reduce its exports to Russia. In addition, the lifting of anti-Russian sanctions will be required to scale up the supply of rare earth metals from the Russian Federation to the United States. The "two—chair" configuration that Russia is forced to adhere to in the current situation may result in some of the side effects of trade wars falling on it, Andrei Barkhota believes.

The fight for rare earth metals is now going on all over the world. For example, in Japan they are used in the automotive and electronics industries, said Vladimir Chernov from Freedom Finance Global. In Korea, they are used in the technology sector, for example, Samsung and LG. And in Europe, they are needed for the development of green energy.

Russia, on the other hand, has its own reserves to meet its needs — the military-industrial complex and the aerospace sector, concluded Alexey Kalachev, an analyst at Finam.

What levers of pressure do China and the United States have now?

Restrictions on the supply of rare earths are a rather harsh step on the part of China in the trade war, which confirms that Beijing will not back down. However, countries do not have many options for pressure.

A further increase in duties is possible, although it will not have such a significant effect, said independent expert Andrei Barkhota. He added: tariffs are already restrictive for a number of items. The parties still have the most significant levers of pressure in terms of forming trade and economic alliances.

— The first alliance is "China — the European Union". It is designed to compensate for China's declining exports by redirecting them to the EU. At the same time, the eurozone countries are very cautious about such prospects. And the second alliance is the USA—Russia. If America manages to pull the Russian Federation out of close contact with China, then we will have a huge sales market, and the United States will have a missing resource base," Andrei Barkhota explained.

Beijing's willingness to escalate sharply may prompt Washington to reconsider its strategy, from negotiations to retaliatory measures. According to Pavel Sevostyanov from Plekhanov Russian University of Economics, this has a long-term incentive for the West to reduce dependence on China, accelerating the development of alternative supply chains. In the meantime, China and the United States will most likely have to negotiate and try to avoid further tightening of measures.