America gave up its rare earth edge, and China took full advantage

The United States' reliance on cheaper imports over several decades has left it heavily dependent on China for the processing of rare earth elements, materials that are essential to a wide range of modern technologies, according to an analysis of the supply chain's development.

Rare earths are used in products ranging from electric vehicle motors and wind turbines to smartphones and advanced defense systems. While the raw materials are mined in multiple countries, the processing and refining stage, which turns raw ore into usable industrial inputs, has become concentrated overwhelmingly in China.

A gradual handover

The shift did not happen suddenly. Over decades, American rare earth processing capacity was allowed to decline as cheaper Chinese-processed materials became widely available, making domestic processing facilities increasingly uncompetitive and leading many US operations to close or scale back.

That gradual handover has left the United States with limited domestic capacity to process rare earths independently of China, a vulnerability that has drawn growing attention from policymakers concerned about supply chain security for technologies central to both consumer electronics and national defense.

Rebuilding domestic processing capacity would require significant investment and time, given the specialized infrastructure and expertise involved. In the meantime, the analysis suggests China's dominant position in rare earth processing gives it substantial leverage over global supply chains that depend on these materials.