President Trump started the year with his typical bravado as he engaged in a trade war with China. He is ending the year having largely backed down.
One reason? China has powerful leverage over the United States through rare earths. The country has built an effective monopoly over these metallic elements, which are difficult to mine and process. They are also critical to the U.S. economy and military — used to make magnets essential to a wide range of electronics, including cars, fighter jets, drones, smartphones, computers and M.R.I. machines.
After Mr. Trump imposed tariffs on China, it retaliated in April with export controls on rare earths that restricted U.S. access, and it tightened those controls in October. Weeks later he folded, sharply reducing his tariffs.
Now that China has successfully squeezed the Trump administration, similar tactics in other realms are easy to imagine.
China could use its chokehold on rare earths to discourage weapons sales to Taiwan, gain access to advanced Western technologies or reject American entreaties to protect intellectual property or crack down on exports of fentanyl ingredients.
Breaking China’s monopoly is crucial for America’s national security. The United States needs to develop reliable alternative sources of rare earths so that our ability to make weapons does not depend on the good will of a potential adversary.
America also needs to reduce its reliance so that even in peacetime, China cannot wield its monopoly as a trump card to be played whenever the interests of the two nations diverge.
Mr. Trump is not to blame for most of the problem. Yes, his trade war was reckless. But China started to build its rare earth dominance decades ago, long before Mr. Trump became president.
The good news is that the United States can, with the help of its allies, end China’s monopoly. The Trump administration has already started some of this work, but it needs to do more — and members of Congress from both parties should get involved. Protecting the country’s access to rare earths needs to be a bipartisan, long-term project.
China’s dominance over rare earths has itself been a long-term project. Its leaders recognized the importance of rare earths to the modern economy by the 1980s and began to subsidize their mining and processing through cheap bank loans and direct grants. This program built a supply chain that includes mines and refineries across Inner Mongolia, Sichuan and other regions. “The Middle East has oil; China has rare earths,” the former Chinese leader Deng Xiaoping said decades ago.
The strategy worked. Today, China mines 70 percent of the world’s rare earths. It processes an even greater share of the global supply — about 90 percent — because some other nations send their rare earths to hubs like Guangzhou.
Rare earths are elements found in trace amounts in rocks.
Extracting them is a difficult process that requires advanced chemical engineering. Chinese manufacturers learned these skills through years of trial and error and repeated their successes in the processing stages, which are necessary to make rare earths economically useful.
During those years, American capabilities atrophied. Allowing China to obtain a chokehold is another example of the shortsighted ways that presidents from both parties fostered the rise of America’s biggest foreign challenger.
One advantage for China has been its tolerance for pollution. Mining leads to air and water contamination, and the refinement process produces toxic waste.
China’s leaders have tolerated much higher levels of pollution than leaders of wealthier countries, which was one reason the United States and its allies were willing to let China take the burden of producing rare earths.
