Highlights

• China's export suspension of rare earth elements targets key minerals crucial for EV production and advanced military technologies.
• U.S. manufacturers face significant challenges due to heavy reliance on Chinese rare earth mineral processing and supply.
• Urgent need for domestic refining capacity and strategic alliances to secure critical minerals supply chain.

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U.S. electric vehicle manufacturers—Tesla (TSLA), General Motors (GM), Rivian (RIVN), and Ford (F)—now face mounting supply chain pressure following China’s April 4 suspension of key rare earth exports to the United States. As reported by Yahoo Finance (opens in a new tab), the suspension targets six rare earth elements and rare earth magnets essential for EV motor production, with current shipments stranded at Chinese ports pending regulatory guidance. Though formally framed as an export license requirement rather than an outright ban, industry analysts warn of significant production slowdowns and surging input costs.

China controls the vast majority of global rare earth mineral supply and 90% of magnet production, making U.S.-based EV assembly particularly vulnerable. While companies like Tesla have reduced reliance on rare earths—cutting use by 25%—next-gen alternatives remain years from scale.

Analysts such as Sam Fiorani (opens in a new tab) of AutoForecast Solutions warn that critical minerals like yttrium and dysprosium are vital not just for EV motors and batteries but also for components like sensors, LEDs, and cameras. With Chinese sellers invoking force majeure clauses, U.S. automakers are effectively locked out of the world’s dominant source.

Unless fast-tracked domestic or allied refining capacity comes online, rising material costs and slowed production could ripple across the EV and broader U.S. manufacturing sectors.

What About Defense?

Yes, much of the press (opens in a new tab) now covers rare earth elements, and now that the ban has commenced, it is part of a tit-for-tat trade war.

​China's abrupt suspension of rare earth exports to the U.S. on April 4, 2025, has exposed the critical vulnerability in America's defense sector known for decades. The embargo targets seven heavy rare earth elements—such as dysprosium, terbium, and yttrium—that are essential for advanced military technologies, including missile guidance systems, stealth aircraft, and precision munitions .

Given that China controls much of the global supply and processing of these elements, the U.S. defense industry faces immediate challenges in sourcing these materials. The situation is exacerbated by the lack of domestic refining capacity, leaving the U.S. heavily reliant on Chinese processing facilities. This dependency poses significant risks to national security and underscores the urgent need for the U.S. to develop alternative supply chains and processing capabilities.​

In response to the crisis, the U.S. government has initiated measures to bolster domestic production and reduce reliance on Chinese imports. Yes, President Trump issued an executive order, but without an integrated industrial policy, Rare Earth Exchanges suggest a steep uphill climb toward resilience.

True companies like MP Materials, which operate the only rare earth mine in the U.S., are ramping up efforts to process these elements domestically. However, industry experts caution that building a self-sufficient supply chain will take time, and the current stockpiles may only suffice until the first half of 2025. Rare Earth Exchanges has suggested that even full-throttle U.S. government efforts with appropriate expenditures will likely take longer than President Trump's time—as measured in political capital.  

If the President’s people are reading Rare Earth Exchanges the operative word is a networked industrial policy—focus first and foremost on this crisis. It’s the key to China’s three phased plan toward supreme global ascendancy.  

And back to the hard realities of today: the U.S. defense sector’s readiness is compromised. The urgent need for accelerated investment in domestic rare earth refining and a diversified supply base is no longer a policy talking point—it’s a national security imperative. This moment demands more than reactive tariffs; it calls for a coordinated industrial policy rooted in strategic alliances. A robust critical minerals and rare earth resilience network—spanning trusted partners—is essential. Yet the current trade reset, steeped in mercantilist instincts, risks undermining the very cooperation required to secure these lifelines. Flexibility, a quality Trump has demonstrated in spades, should be the guiding principle now—redirecting the agenda toward practical, long-term resource security. Rare Earth Exchanges to Mr. President: the time is now!