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Recently, a top US official came back from South Carolina brandishing a small piece of metal, declaring it was the initial rare-earth magnet made in the US in decades.

He indicated that this was proof the US is ending “China's dominance on our supply chain.” Because of a new rare-earth mineral manufacturing plant in the state, the official continued, “The nation is regaining its autonomy.”

Breaking China’s Dominance in Critical Materials

Overthrowing China’s processing and manufacturing dominance in these materials, which are essential for some semiconductors, energy storage, and armaments, is a major focus for the current US administration. Through trade measures and other strategies, the US is counting on returning the industry home to US soil.

These measures prompted Beijing to restrict rare-earth shipments to the US and pushed the administration to forge agreements with Australia, Malaysia, Cambodia, and a key Asian economy.

Although the US and China have since brokered a trade truce on rare earths, China—with around the majority of worldwide extraction and nearly all of global processing capacity—holds an advantage that will be difficult to erode.

“Rare earths are used in electric motors but also in defense technology that have clear uses for the defense department,” says an industry expert. “Any device that has a strong magnet in it uses rare earths.”

No Easy Fix for American Self-Sufficiency

It won't be simple for the US to reduce its dependence on Chinese production of materials critical to defense, semiconductor production, and the shift from fossil fuels to renewable sources. According to federal reports, the US imported 80% of the rare earths it used in 2024.

In the case of rare-earth minerals such as a key element, essential for chip production, and another mineral, critical for defense systems, China's control over processing rises to 99%. Dysprosium and terbium are found in magnets essential for EV motors and power systems in renewable energy, along with applications for mobile devices, high-intensity lighting, and energy plants.

Extended Timelines and Global Deposits

Initiatives to reduce the US’s dependence on Chinese production of rare-earth minerals may require a long time. Analysts point out that “Rare earths” is somewhat of a misnomer because they’re relatively abundant in the planet's surface, but many deposits, such as those in Eastern Europe, where an agreement was made earlier this year, are only in the initial phases of extraction.

“The issue isn't scarcity per se, it’s that China can control how much is sent abroad,” a specialist explained, adding that securing permits from China can be a complex and time-consuming endeavor.

Greenland, a key area of US attention, and South America, are two other countries with significant rare-earth resources. Domestically, there are deposits in California, the Midwest, and the central US, with the biggest active site located at Mountain Pass, the state, about 60 miles from Las Vegas.

Federal Efforts and Funding

In July, the US Department of Defense took on the role of the largest shareholder in an industry operator, with intentions to open a new “integrated” plant, named 10X, to produce magnets crucial for F-35 fighter jets, drones, and submarines.

Across the continent, measured and indicated resources of rare earths were estimated to include millions of tons in the US and additional millions in the northern neighbor—far less than the 44m tons estimated to be in the Asian giant.

Following direct investment in the steel industry and domestic technology firms, the federal agency said it was prepared to make targeted funding in strategic resource firms.

“The US is up against state capital because China is picking these as priority areas that they aim to control,” a senior official said during a speech this spring.

The official suggested that the US could use a sovereign wealth fund to accelerate production. “How could the richest nation in the world have the biggest sovereign wealth fund?” he questioned.

Historical Obstacles and Prospects

American attempts to promote domestic production have floundered in the past when Chinese producers lowered prices, making unsubsidized rare-earth development uneconomic against Asia's competitive pricing and far-sighted planning.

Five years ago, a market expert testified before a US Senate committee that “those who invest in battery capacity and industrial networks now are poised to lead this sector for generations to come. It is not too late for the US but immediate steps are required.”

Five years on, a race to assemble trading alliances around rare earths is speeding up.

“In about a year from now, we’ll have an abundance of critical mineral and rare earths that you won’t know what to do with them,” the President told the media. That came in the wake of a request for payment in the form of natural resources from another country. In September, the government of Pakistan agreed to a deal with an American company, securing rights to minerals such as key metals.

Can the US Succeed?

But, is America able to close its gap and weaken China’s hold on rare-earth global networks? “The US has taken really significant steps already,” an analyst comments. The nation, he continues, cannot be “independent in the near future because it requires years to start operations and build refining capacity.”