Rare earth minerals have become a major point of contention in the trade war negotiations between US President Donald Trump and Chinese President Xi Jinping.
In October, Jinping announced a plan to tighten the export controls on this commodity, and Trump responded by threatening to raise tariffs on Chinese imports to 100%.
Rare earth minerals comprise 17 metallic elements necessary for manufacturing state-of-the-art technology, including semiconductors, smartphones, military equipment, and electric vehicles.
“In April, China first announced export controls on rare earth metals, requiring government approval before shipments could leave the country,” Joseph Harris, fiscal policy analyst for the John Locke Foundation, told the Carolina Journal. “The move unsettled global markets, and imports to North Carolina of rare earth metals surged in May as companies worked to secure supplies before the rules took full effect.”
Through July year-to-date, North Carolina’s imports of inorganic chemicals, precious and rare earth metals, and radioactive compounds rose sharply from $364.1 million to $1.1 billion — an increase of roughly 211%, according to data from the Economic Development Partnership of North Carolina (EDPNC). Of that $1.1 billion total, $366.1 million was imported in May alone, with $119.6 million of May’s imports coming from China.
Import figures come from a broad federal trade category labeled: “Inorganic Chemicals; Precious & Rare-Earth Metals & Radioactive Compounds.” This classification encompasses not only rare earth metals but also other materials.
“For decades, the United States led the world in rare earth metal production through the Mountain Pass Rare Earth Mine in California, which supplied most of the global market from the 1960s through the 1980s,” continued Harris. “However, by the late 1990s, environmental regulations and permitting rules had driven up the cost of refining. At the same time, China lowered costs through heavy subsidies and lax environmental standards, allowing it to dominate the market ever since the mine shut down in 2002.”
China now produces more than 90% of the world’s processed rare earth metals, a dominance it achieved through substantial efforts made by the Chinese government. With such a significant market share, China’s April announcement to implement export controls raised concerns among firms that rely on rare earth metals to produce modern technologies.
Trump is also seeking new trade agreements for rare earth minerals with other Asian countries, including Japan, Vietnam, and Thailand.
“Expanding trade with allies like Japan and Vietnam is precisely the right approach — competition and cooperation are key to reducing our dependence on China,” concluded Harris. “But sweeping tariffs raise costs for Americans. If we genuinely want to secure our access to rare earth metals, we need to make it affordable to mine and refine rare earths here at home by cutting red tape and allowing the market to work.”
For now, trade tensions have cooled, with the US postponing a 100% tariff on Chinese imports, and China is expected to delay expanding the export controls on rare earth minerals.
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