US Allies Accelerate Rare Earth Supply Diversification After China's Export Controls

U.S. Treasury Secretary Scott Bessent criticized China's October imposition of export controls on rare earth minerals as a strategic mistake that has accelerated efforts by the U.S. and its allies to diversify supply sources within the next two years. Following a meeting between President Donald Trump and Chinese leader Xi Jinping, China agreed to suspend these restrictions for one year, providing short-term relief but not altering the longer-term strategic challenges. China controls nearly 70% of global rare earth mining and about 90% of processing, making its dominance difficult to undercut despite the temporary export delay. The rare earths are essential for many high-tech products, including defense systems, electric vehicles, and consumer electronics, heightening concerns over supply chain vulnerabilities. Bessent noted that China’s ability to use rare earths as a coercive tool is limited to about 12 to 24 months due to countermeasures and ongoing U.S. diversification efforts, including new mining and refining projects in Southeast Asia and Australia. Analysts view China's export delay as a tactical move to stabilize trade relations rather than a policy reversal, emphasizing the urgency for the U.S. and allies to invest in domestic and allied rare earth production capabilities.