The Trump administration has launched a series of measures to ensure that US defense contractors source critical minerals domestically or from allied nations, building a supply chain that officials hope would break China’s monopoly over materials such as scandium and tungsten.
Since July, US President Donald Trump has signed an executive order restricting the use of adversary-sourced defense materials, blocked exports of tungsten and battery waste and pledged more than US$2 billion for domestic mineral production – including US$400 million toward an Australian mine developing the world’s first primary scandium deposit.
Here are the recent measures:
- On July 20, Trump signed an executive order restricting the Department of War’s waivers for critical materials sourced from adversary nations, including China, Russia, North Korea and Iran. The order encourages contractors to qualify new domestic and allied mineral sources. From January 1, 2027, such waivers end for materials from the four nations, unless a contractor has an approved plan to remove the material from its supply chain.
- On July 30, Trump signed a presidential determination under Section 101 of the Defense Production Act, finding recoverable critical minerals and materials, including tungsten scrap and battery waste known as black mass, to be scarce and essential to national defense, and directing the Secretary of Commerce to restrict their export.
- On August 7, the US Treasury welcomed new S&P Global reference prices for gallium, germanium, tungsten, antimony, neodymium and praseodymium, a move meant to support a broader agreement on trade in critical minerals that would set phased-in, mineral-specific price floors with allies including Japan, Mexico and the European Union. Trump held a mining industry roundtable where he unveiled more than US$2 billion in new mineral investments.
Among the new projects, the largest was a US$1.4 billion Department of War award to Sila Nanotechnologies, a California-based battery maker, to expand silicon-carbon anode production and build a lithium-ion cell plant for satellites, drones and munitions.
The next biggest was US$400 million for Sunrise Energy Metals to develop the world’s first primary scandium mine in Australia, securing high-heat aluminum alloys used in fighter jets and spacecraft.
The department also put US$150 million into Niron Magnetics, a Minnesota firm developing rare earth-free permanent magnets, and US$85 million into Standard Bauxite for refractory-grade bauxite used in high-temperature-resistant components. Smaller awards went to graphite, tantalum, niobium and boron projects, plus US$180 million for mining schools.
Chinese state media and commentators have questioned whether US defense contractors can source enough critical minerals from domestic producers and western allies within five months, casting doubt on Washington’s push for supply chain independence.
“Trump is pushing to end America’s dependence on Chinese critical minerals by January next year, but that goal faces a harsh reality, because US mining and processing firms are not yet ready,” Guancha.cn said in a commentary. “It is a mission impossible for US defense contractors and their suppliers to stop buying rare earths, magnets, tungsten, molybdenum and tantalum from China, Russia, Iran or North Korea within five months.”
“The complexity of mineral refining has also slowed the progress of US projects,” it said. “The foundations underpinning America’s challenge to China’s dominance of the rare earth supply chain remain thin.”
Guancha pointed to ReElement, a rare earth refining startup, which plans to adapt chromatography, a technique common in pharmaceuticals but never before used to process minerals at scale.
The outlet also cited a lawsuit in which USA Rare Earth was accused in May by MP Materials of stealing technology it had developed for permanent magnets, with the two companies now locked in litigation.
“The US wants to rebuild in five months an industrial system that took China more than two decades to establish,” says a Tianjin-based columnist using the pen name Zui Qingxian. “Rare earths need smelting, separation, purification and processing before they can be used. China has long dominated that chain, holding close to 90% of global refining capacity.”
“Washington wants to break free of dependence on China, but tens of billions of dollars in US investment have not quickly produced a complete, stable processing system,” he writes. “American critical mineral suppliers do not lack money or policy support. Their problem is the absence of an industrial base built up over decades.”
The columnist says that the US has, over the last 30 years, outsourced the highly polluting, long-cycle smelting stage of the rare earth chain, leaving gaps in technology, industry and skilled labor. He adds that rebuilding a complete supply chain may take at least five years.
He says American companies have to admit that they still cannot maintain production without China’s rare earths in the short term.
Diversifying away from China
China first banned exports of gallium, germanium and antimony to the US in December 2024, then tightened broader rare earth controls through 2025 before extending dual-use restrictions to Japan in early 2026.
China’s rare earth exports to Japan fell 51% year-on-year in the first half of 2026, according to Nikkei, a decline sharper than the 16% drop in Beijing’s overall rare earth exports over the same period. The decline in shipments to Japan accelerated in June alone, plunging 81% from a year earlier, with yttrium exports dropping to zero.
Exports of dysprosium and terbium to Japan have registered zero every month since the start of the year. China’s rare earth exports to the US also fell 28% over the same period.
The US remains almost entirely reliant on imports for the same group of dual-use niche minerals, including gallium, germanium, dysprosium, terbium, yttrium and samarium, according to the US Geological Survey. But that reliance is not the same as dependence on China. Only about 19% of US gallium consumption traces to China, with the rest sourced largely from Japan and other partners.
The United States’ yttrium imports are 70% Chinese, yet Germany, Austria and South Korea already supply the remainder, and most germanium imports come from Belgium and Canada, not China.
Dysprosium and terbium are the exception. China still dominates global processing of heavy rare earths, which is why Washington’s US$400 million stake in MP Materials in 2025 targeted them specifically. Rare earths overall, the closest available proxy for samarium, are 80% import-reliant, though only 56 percentage points of that traces to China. In short, the US could source most of these six elements from allies, not China.
The Trump administration’s August 7 mining-roundtable investments, however, targeted a different set of materials, including scandium, graphite, boron, tantalum and niobium, where officials see faster paths to production.
The National Association of Manufacturers said in a report in March that the US is at least 50% import-reliant for 33 of the 58 minerals it considers critical to manufacturing. Of those, 13 minerals see the US depend entirely on foreign suppliers, while another 20 see imports cover more than half of domestic supply, it said, citing US Geological Survey data.
The report called for a two-pronged approach, combining domestic and international action, to build capacity at home and secure supply abroad for US economic and national security.
“China’s new exit and entry rules, taking effect September 15, will help stop local rare earth technicians from leaking core technical parameters and knowhow to foreign firms,” says a Henan-based writer using the pen name Big Octopus.
The writer cites three previous cases:
- A veteran rare earth engineer in Ganzhou, Jiangxi, who holds core parameters for several extraction lines, two years ago was offered US$300,000 a year and green cards for his family by a headhunter claiming to represent a Singaporean institute. The “consulting” role turned out to be casual chats that drifted into questions about confidential production details.
- A Cayman Islands-registered company sent an ethnic Chinese representative to dine with technical staff at a local rare earth firm in Inner Mongolia, starting with small talk before asking for the exact mixing ratio of P507, a rare earth extraction chemical, with payment negotiable. The information is not top secret, but falls under restricted export-control technology.
- Dongguan, Guangdong, cracked a case last year involving a US-funded headhunting firm in Shenzhen that posed as a recruiter but was actually screening rare earth and solar engineers. Its database held files on over 1,000 technical staff, including their expertise and personal weaknesses.
He says legitimate engineers can still attend international conferences or take family holidays abroad, but those who may leak technology will be barred from leaving China.
Read: China exit rules tightened to guard rare earth, battery secrets
Follow Jeff Pao on X at @jeffpao3
