The Rare-Earth Reality: Why U.S. Defence Remains Dependent on China Despite Trump’s Tariff Rhetoric

In recent years, the Trump administration’s aggressive tariff policy on Chinese goods and nationalist economic messaging—promising to “bring economic prosperity back to the U.S.”—has been lauded by supporters as a bold reclaiming of American industrial strength. Yet beneath the veneer of strength lies a sobering truth: decoupling from China remains more rhetoric than reality, particularly for critical defense suppliers.

Defense giant Raytheon’s former CEO, Greg Hayes, put it bluntly: “We can de-risk but not decouple,” citing “several thousand suppliers in China” and underscoring the impossibility of fully disentangling from Chinese supply chains. This same dynamic reflects broader industrial dependencies: despite plans to reduce reliance, U.S. firms remain deeply enmeshed with Chinese inputs.

In April 2025, Beijing introduced an export-licensing system for seven mid-to-heavy rare-earth elements—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—in response to Trump’s tariff hikes. Rather than banning exports outright, China imposed discretionary licensing, allowing it to regulate shipments with precision and maintain a strategic chokepoint without overt trade violations.

The effect was swift and stark: exports of rare-earth magnets to the U.S. plunged by roughly 74 percent year-over-year in May, triggering acute supply disruptions in defense-linked sectors. In parallel, unintended consequences emerged: in June and July, following negotiations, exports rebounded—U.S. imports surged by 660 percent in June and another 76 percent in July—demonstrating China’s ability to modulate supply in real time.

The scale of U.S. military vulnerability is considerable. Roughly 78 percent of Department of Defense weapons systems—around 80,000 unique parts across nearly 1,900 platforms—are dependent on critical minerals controlled by China. Rare-earth elements power an array of advanced systems: F‑35 jets use over 900 pounds of REEs; Arleigh Burke-class destroyers require about 5,200 pounds; Virginia-class submarines some 9,200 pounds. Beyond ships and jets, antimony and gallium—used in GPS, radar, and precision munitions—are similarly subject to Chinese supply vulnerabilities.

A West Point analysis points out that China refines over 85 percent of global rare earths and produces nearly 90 percent of high-performance magnets. Following the April restrictions, procurement slowdowns hit suppliers for radar, propulsion systems, and more.

Recognizing this peril, the U.S. government and Pentagon have begun building domestic resilience. The Department of Defense’s 2024 National Defense Industrial Strategy set a goal: by 2027, achieve a fully integrated U.S. mine-to-magnet rare-earth supply chain. Since 2020, the Pentagon has committed more than $439 million toward that effort. A key player is MP Materials, operator of the U.S.’s only active rare-earth mine, Mountain Pass in California. In mid-2025, the Pentagon became its largest shareholder with a $400 million investment, triggering plans for a new rare-earth magnet facility known as the “10X Facility.” Apple also committed $500 million to purchase U.S.-made magnets from MP. Meanwhile, MP began producing neodymium-praseodymium metals in Texas in early 2025, aiming to revive domestic NdFeB magnet production.

Despite these breakthroughs, analysts caution that rebuilding a fully independent supply chain will take years—perhaps decades—given regulatory, environmental, and technical hurdles.

In a recent escalation, former President Trump warned of a potential 200 percent tariff on Chinese rare-earth magnets if Beijing continues to restrict supply—highlighting both frustration and the political leverage perceived by U.S. leaders. At the same time, a tentative trade agreement aims to reduce U.S. tariffs to 55 percent and facilitate resumed rare-earth exports from China—though critics argue supply remains fragile.

Congress and security experts increasingly frame rare-earth independence as a national security imperative—seeing the effort as akin to a “Manhattan Project” of strategic minerals.

The central irony is stark: while nationalist economics under Trump invoked sovereignty and American renewal, the reality exposed stark dependencies—most notably in military manufacturing. Raytheon’s candid admission—that full decoupling from Chinese supply chains is impossible—underscores a harsh truth: rhetoric outpaces capability.

Military readiness hinges not on slogans but on access to raw materials fundamentally controlled by a strategic rival. Defense platforms essential to U.S. security—from jets to missiles to submarines—remain reliant on a narrow band of Chinese-dominated rare-earth processing. The rare-earth chokehold stretches across the F‑35 fleet, naval destroyers, smart bombs, radars, missiles—even the precision guiding systems vital to modern warfare. And as long as that dependency exists, the fantasy of complete economic decoupling is nothing more than a perilous illusion.