Today, China is attempting to strangle certain sectors of the economy of the United States and the economies of the free world. China has imposed expansive restrictions on rare earth exports. Even goods that contain trace amounts of rare earths are subject to China’s export restrictions. U.S. Treasury Secretary Scott Bessent claims China has “pointed a bazooka at the supply chains and the industrial base of the free world.”
For now, China thinks it has the upper hand in the trade negotiations with the U.S. But President Donald Trump and his senior advisers have negotiating cards to play as well. For example, China is probably more than five years behind the free world in semiconductor fabrication technology. Semiconductors are the oil of this century. The U.S. can deny China access to critical inputs into the semiconductor manufacturing process. Without these inputs, China cannot make headway in catching up in the semiconductor industry.
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But it is also important to remember that rare earths are not rare. They are a commodity.
Rare earths and rare earth magnets can be extracted from the tailings of America’s coal mines. With an Operation Warp Speed approach to the rare earths problem, the U.S. could be self-sufficient in rare earths and magnets within 12 months. Under his expansive national security powers, Trump can cut through the bureaucratic and litigation red tape that makes building and mining so difficult in the U.S.. Trump can issue a national security executive order directing U.S. companies to leach rare earths and rare earth magnets from the waste materials of U.S. coal mines. The United States Supreme Court, under Chief Justice John Roberts, grants the President expansive executive powers — especially regarding national security.
In addition, the U.S. already has three rare earth mines. The President should provide financial support to the companies that operate the mines. Under his national security powers, the President can reallocate funds from the defense budget. The President could guarantee a profit for mining rare earths. Trump could also work with allied nations that have access to rare earth deposits. Australia, a close ally, has vast deposits. Guarantee Australian companies a profit from extracting rare earths, and supply will flow. After all, rare earths are a commodity. It is all about price.
There are immediate workarounds to the rare earths problem. Companies can recycle rare earths and magnets from obsolete electronic goods and military equipment. Use recycled materials for the country’s F-35 fighter aircraft. Use recycled materials for America’s fleet of nuclear submarines. New technology will also enable the U.S. and free countries to deny China the ability to extract concessions in the ongoing trade negotiations.
Tetraenite, a natural alloy of iron and nickel that exhibits permanent magnetism, was first discovered in iron meteorites in 1980. Tetraenite is rare, but scientists at Northeastern University in the U.S. and researchers at Cambridge University in Great Britain have formulated synthetic tetraenite, which offers great promise as an alternative to rare earth magnets currently sourced from China.
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Niron Magnetics is now commercializing iron nitride magnets, which are twice as powerful as rare earth magnets. The company has received more than $17.5 million in funding from the Department of Energy’s Advanced Research Projects Agency. The President should direct the D.O.E. to accelerate this program. A German company, Mahle, has developed a highly functional electric motor that eliminates the need for rare earth magnets. Mahle can guarantee performance. The company uses a wear-free traction motor design that enables continuous output.
The U.S. and its allies can beat China at its own game. The effort by China to strangle the U.S. economy and the global economy is a clear reminder that the U.S. and its companies should decouple from China as soon as possible. In ambition and action, China is our greatest adversary.
James Rogan is a former U.S. foreign service officer who has worked in finance and law for 30 years. He writes a daily note on the markets, politics, and society. He can be followed on X and reached at [email protected].
