The Rare-Earth Reckoning covers how we got to a world where China controls 90% of global rare-earth refinement and magnet production, and what the US should do given the enormous leverage China gets from that control. As the piece makes clear, the US (and the rest of the world) sleepwalked over decades into a situation where technologies from the run-of-the-mill (earbuds) to the highly strategic (F-35 fighter jets) could be cut off from the materials required for making them by a potential adversary.
Certainly, some in the US understood that rare-earths mattered and that China’s control over them was a serious problem but those concerns didn’t rise above the din of everyday politics. All that changed after Liberation Day when China restricted rare-earth exports and made it clear not just to US policymakers but also to the average American that China had leverage and it would use it. What’s interesting to me about this is that the US (and its allies) seem to have woken up and are actually acting to reduce China’s leverage. Within the last year, the US government made investments into MP Materials ($550M), USA Rare Earth ($1.6B), and Serra Verde ($565M) in addition to partnerships with Japan, Australia, and Thailand.
This makes me wonder if China regrets playing the rare-earths card as forcefully as they did. It also reminds me of Commerce Secretary Howard Lutnick saying the quiet part out loud: “You want to sell the Chinese enough [Nvidia chips] that their developers get addicted to the American technology stack, that’s the thinking.” China responded by initially blocking Chinese AI companies from buying Nvidia chips to create the demand required for the creation of Chinese leading-edge AI chips. While China is now allowing the purchase of some Nvidia chips, it’s clear they’ll do whatever it takes to reduce the US’ leverage. And that’s the thing about leverage: it’s most effective when it’s understood by just enough people who matter (so you get what you want) but not by too many people to actually galvanize action.