Trade deals can't stop China's rare earth edge

Politico

11-06-2025

With help from Nahal Toosi and Daniel Lippman
Subscribe here | Email Eric
The Trump administration says a 'framework' agreement sealed by U.S. and Chinese trade negotiators in London on Tuesday will lift Beijing's crushing export restrictions on rare earth minerals essential to U.S. defense industry production lines.
That vulnerability underscores the geostrategic power Beijing wields through its global dominance of the critical minerals' supply chain, from mining to processing. China's ability to deny the U.S. defense industry the materials it needs is a powerful negotiating tool, and impacts U.S. military preparedness against China's increasingly aggressive power projection in the Indo-Pacific.
'It's going to take determination over several years until we're in a better position to decouple from the Chinese on this issue,' said MICHAEL ALLEN, a former National Security Council senior director in the George W. Bush administration. 'This is where we're the most vulnerable — this is a chink in our armor.'
This dynamic frames the new export agreement as a temporary reprieve rather than a long-term remedy to U.S. dependence on Chinese materials.
China holds a near monopoly on the global supply of rare earths — metallic elements essential to both civilian and military applications. And since December, Beijing has imposed export restrictions on 11 such minerals in the deepening U.S.-China trade war.
All of them are on the U.S. Geological Survey's list of 50 'critical minerals' essential to 'the U.S. economy and national security.' They include antimony, necessary to produce munitions; samarium, which goes into precision weaponry; and germanium, which is a key to the production of military night vision equipment.
The scarcity of rare earths raises questions about whether the Pentagon could muster adequate resources to deter or prevail in potential future conflicts that would drain weapon system inventories that require rare earth inputs.
'Panic might be too strong a word, but deep concern is not,' said BRADLEY MARTIN, researcher at the RAND Corporation and an expert on defense industries' supply chains. 'It's not as if they'll run out of weapons because we're not using weapons and materials in a wartime setting, but they'll be running out of things and won't have a place to go in order to overcome the restrictions.'
The Pentagon didn't respond to a request for comment about the impact of China's rare earth trade curbs on U.S. military preparedness.
The trade deal — which neither Beijing nor the White House has released details of yet — awaits the approval of President DONALD TRUMP and China's leader XI JINPING. Trump says it will end industry worries about rare earth shortages.
'Any necessary rare earths will be supplied, up front, by China,' Trump said on Truth Social on Wednesday.
But the sourcing of raw critical minerals is just half the battle. Even if the U.S. can mine or import the critical minerals it requires, it is almost wholly dependent on Chinese facilities to process those materials into usable form.
The White House took action to boost critical mineral production 'to the maximum possible extent' with an executive order in February. But it will take years for the U.S. to wean itself from China's rare earth supplies, giving Beijing a potent weapon in future trade conflicts.
Beijing has already signaled that its willingness to ease restrictions on rare earth sales to the U.S. is temporary. China's rare-earth export licenses for U.S. manufacturers have a six-month expiry date, the Wall Street Journal reported Wednesday.
'This is the cudgel that China will always be able to wield, as this is something they've got up their sleeve,' said MARC BUSCH, a professor of international business diplomacy at Georgetown University, who previously advised both USTR and the Commerce Department on technical trade barriers.
The Inbox
TROUBLE IN BAGHDAD: The U.S. embassy in Baghdad and the U.S. consulate in Erbil are under 'ordered departure' status, our own Felicia Schwartz and Paul McLeary report.
The reason for placing the diplomatic posts under such status is unclear. But they come as Iran has vowed to strike American installations if Israel makes good on threats to strike its nuclear facilities.
AMERICAN JUSTICE GOES MANO DURA: U.S. officials are urging Mexican prosecutors to go after politicians in their country with ties to organized criminal groups.
Per Reuters' Diego Oré, Secretary of State MARCO RUBIO and his team have called on Mexican officials to prosecute Mexican politicians tied to cartels and extradite them to the United States. The State Department has threatened to levy additional tariffs on Mexico if the Mexican government doesn't comply with these wishes.
The conversations between Washington and Mexico City, which Reuters reports have occurred at least three times since Trump took office, speak to the Trump administration's eagerness to aggressively address the threat posed by Mexican cartels. Complying with U.S. demands could put Mexican President CLAUDIA SHEINBAUM in a bind, Oré writes, as some of the politicians American officials are eyeing are also members of her political party.
Read: How smuggled US fuel funds Mexico's cartels by The Financial Times' Christine Murray, Chris Campbell, Peter Andringa, Alison Killing and Sam Joiner
AUKUS IN TROUBLE? The Defense Department confirmed that it's reviewing the AUKUS submarine pact, which could be a major blow for U.S. partnerships in the Indo-Pacific.
The Pentagon told The Financial Times' Demetri Sevastopulo that it wanted to ensure that 'this initiative of the previous administration is aligned with the president's 'America First' agenda.' The review, which is expected to take 30 days, could derail one of the Biden administration's signature accomplishments towards building a 'latticework of alliances' for the U.S. to counter China in the Indo-Pacific.
Senate Foreign Relations ranking member JEANNE SHAHEEN (D-N.H.) warned that the move would please China. 'Scrapping this partnership would further tarnish America's reputation and raise more questions among our closest defense partners about our reliability,' said Shaheen. 'And at a moment when we face mounting threats from [China] and Russia, we should be encouraging our partners to raise their defense spending and partnering with them on the latest technologies — not doing the opposite.'
ROOM FOR DISAGREEMENT: Israel's threats to bomb Iranian nuclear facilities may potentially help Trump broker a nuclear deal with Tehran. But as loyal readers reminded your hosts last night, that doesn't mean Israel wants a nuclear deal between Iran and the United States — or that Iran will take the bait.
To be fair, their feedback isn't grasping at straws — Israel is on the record saying it is opposed to a nuclear deal between the U.S. and Iran. And some analysts believe Israel's threats may very well have the opposite effect on Iran's negotiations by undermining the president's credibility.
'Tehran is more likely to see Israel's threats as designed to sabotage diplomacy, which fuels their suspicions that Trump may not be serious about securing a deal,' wrote TRITA PARSI, an executive vice president at the non-interventionist Quincy Institute think tank in Washington. 'Such doubts are not conducive to eliciting more concessions from Iran.'
Trump, for his part, is also acknowledging that the road to a nuclear deal is harder than expected. On the 'Pod Force One' podcast, he said that 'I'm getting more and more — less confident about it.'
IT'S WEDNESDAY: Thanks for tuning in to NatSec Daily! This space is reserved for the top U.S. and foreign officials, the lawmakers, the lobbyists, the experts and the people like you who care about how the natsec sausage gets made. Aim your tips and comments at [e-mail], and follow Eric on X @ebazaileimil.
While you're at it, follow the rest of POLITICO's global security team on X and Bluesky at: @dave_brown24, @HeidiVogt, @jessicameyers, @RosiePerper, @nahaltoosi.bsky.social‬, @PhelimKine, @ak_mack, @felschwartz, @connorobrienNH, @paulmcleary, @reporterjoe, @JackDetsch, @samuelskove, @magmill95, @johnnysaks130 and @delizanickel
Keystrokes
PANAMA SAYS ADIOS, HUAWEI: Panama is dismantling Huawei telecommunications infrastructure with the help of the United States.
The U.S. embassy in Panama announced today that the U.S. will spend $8 million to replace Huawei technology at 13 different sites across the Central American country with 'secure American technology.' The project will also add new communications towers in the country with the aim of ensuring Panamanian security forces 'control and manage their own telecommunications systems — strengthening shared security and the U.S.-Panama partnership.'
It's the latest sign that Panama and the United States are on the path towards a much more stable relationship, as the country's government has looked to repair ties with Washington following a row early in Trump's presidency about the influence of China over the Panama Canal.
The Complex
CHINA SWIPES AT JAPAN'S MILITARY: Chinese state media has slammed Japan's tests this week of long-range missiles as a threat to regional stability. Those exercises — part of an annual live fire exercise — included the deployment of an 'improved surface-to-ship missile with a range of more than 1,000 kilometers,' per Japan's Jiji Press.
An op-ed in state media outlet China Military Online argued that Japan's 'expedited development of long-range strike capabilities and pursuit of the self-professed 'enemy bases' strike capabilities' have breached' restrictions in Japan's constitution that limit the Japanese military's ability to possess offensive weapons.
That commentary reflects Beijing's concerns that Japan is preparing its military for a potential future conflict with China amid rising tensions across the Taiwan Strait and in the South China Sea.
Broadsides
NO PATIENCE FROM RUBIO: The U.S. government is voicing its displeasure towards efforts from allies to express sympathy or concern for Palestinians.
As Reuters' John Irish and Humeyra Pamuk scooped, the Trump administration is discouraging countries from participating in a U.N.-hosted conference next week in New York led by France and Saudi Arabia that will discuss a two-state solution to end the Israeli-Palestinian conflict. And that's not the only move the administration has taken in the last 24 hours.
Late Tuesday night, the State Department issued a statement from Rubio lashing Canada, Norway, New Zealand, Australia and the United Kingdom for sanctions they levied against firebrand Israeli ministers ITAMAR BEN-GVIR and BEZALEL SMOTRICH for allegedly inciting violence against Palestinians in the West Bank. Rubio said the sanctions 'do not advance U.S.-led efforts to achieve a ceasefire, bring all hostages home and end the war.' Rubio also chided the countries: 'We remind our partners not to forget who the real enemy is.'
Transitions
— The dozen members of the board of the Fulbright Program resigned today, per The New York Times' Edward Wong, accusing Trump administration officials of interfering in their operations.
— SABRINA SINGH is joining Seven Letter as a partner. She most recently was deputy press secretary at the Defense Department, and is a KAMALA HARRIS alum.
— Cybersecurity and Infrastructure Security Agency Executive Director BRIDGET BEAN retired today after a year in the role, our own Dana Nickel reports (for Pros!). Bean, who has worked at CISA for roughly three years under both the Biden and Trump administrations, is the latest departure in a series of high-profile exits at the cyber agency.
— SAM VARIE is departing as communications director for Rep. JOE COURTNEY (D-Conn.) and on June 23 will join the Embassy of Australia as U.S. media and external relations manager.
— JOSEPH HUMIRE is now a deputy assistant secretary of Defense for policy. He was previously executive director of the Center for a Secure Free Society and a senior fellow at the America First Policy Institute and Heritage Foundation.
What to Read
— Tom Nagorski, The Cipher Brief: How Long Can Ukraine Fight?
— Mona Yacoubian, Center for Strategic and International Studies: Did Trump Just Upend Decades of U.S. Middle East Policy?
— State Department Inspector General's Office: Audit of the Department of State's Monitoring of Anti-Corruption Programs and Activities in Central and Eastern Europe.
Tomorrow Today
— Center for Strategic and International Studies, 8:30 a.m.: Protecting America's Spectrum
— Atlantic Council's Democracy + Tech Initiative, 9 a.m.: Why the UN's Internet Governance Forum Still Matters Twenty Years On
— Atlantic Council, 9:30 a.m.: Beyond Critical Minerals: Capitalizing on the DRC's (Democratic Republic of the Congo) Vast Opportunities
— Senate Armed Services Committee, 9:30 a.m.: The posture of the United States Central Command in review of the Defense Authorization Request for FY2026 and the Future Years Defense Program.
— House Foreign Affairs South and Central Asia Subcommittee, 10 a.m.: Bureau of Industry and Security FY2026 Budget: Export Controls and the AI Arms Race
— House Armed Services Committee, 10 a.m.: Department of Defense FY2026 Budget Request
— Carnegie Endowment for International Peace, 10 a.m.: Launch of the International Foundation for Electoral Systems' 'Artificial Intelligence Advisory Group on Elections.'
— Carnegie Endowment for International Peace, 3:30 p.m.: Perspectives on Regional Security in the Middle East
— Council on Foreign Relations, 6 p.m.: 'The future of the World Bank' with World Bank President AJAY BANGA
Thanks to our editors, Rosie Perper and Katherine Long, who will never overcome our advantage in securing rare earth minerals.