Two weeks ago, US President Donald Trump visited the Chinese capital Beijing for a high-level summit with Chinese President Xi Jinping aimed at easing trade tensions between the two countries, securing new business deals, and leveraging Chinese diplomatic influence to help manage the conflict with Iran.

Trump was accompanied by a delegation of top US chief executives in an effort to push China to open its markets to American technology companies, and he succeeded in securing several multi-billion-dollar agreements.

The summit resulted in a limited tactical easing and a relative improvement in diplomatic relations between the two rival powers, with the White House stating that Xi Jinping still opposes the militarization of the Strait of Hormuz.

However, Trumps visit saw a clear failure, as the talks in Beijing did not produce a formal agreement or long-term trade truce regarding China easing restrictions on rare earth exports.

According to an opinion article published this week by the US military newspaper Stars and Stripes, China can paralyze the US drone fleet with a single phone call.

Last November, Beijing confirmed that the broad restrictions it had previously imposed on rare earth exports remain in place, including a complete ban on rare earth extraction and separation technologies, in addition to quantitative restrictions on certain critical minerals such as tungsten, bismuth, and antimony, as well as medium and heavy rare earth elements.

China had temporarily suspended a second wave of restrictions that required export licenses for foreign entities and products containing small amounts of Chinese rare earth materials in October 2025, but only for one year.

An analysis by BMI Research, a Fitch Group unit, showed that Xi Jinpings team merely promised to address US supply shortage concerns without offering structural extensions or concrete policy adjustments during the latest meeting.

Heavy rare earth exports remain restricted

Despite the temporary easing period, Chinas exports of critical heavy rare earths remain sharply lower, with dysprosium exports currently standing at only 41% of pre-restriction levels, while terbium exports are at 49% and yttrium exports at 42%.

Yttrium prices have surged around fifteenfold due to the severe shortage caused by Chinese restrictions, creating widespread disruptions in US aerospace and semiconductor industries, where the mineral is used as a critical thermal protection and insulation layer.

China supplies around 70% of US yttrium needs, in addition to 100% of its terbium, holmium, and lutetium requirements.

Washington races to build domestic alternatives

Chinas near-monopoly influence over the rare earth sector has pushed the United States and its Western allies to urgently search for alternative sources.

Last July, the US Department of Defense agreed to purchase $400 million in preferred shares of MP Materials, making the Pentagon the companys largest shareholder with a stake of around 15%.

The agreement includes a ten-year purchase contract with guaranteed minimum pricing, ensuring the companys production is directed toward defense and commercial customers within the United States in order to strengthen the independence of domestic supply chains.

The company is using this funding, along with $1 billion in commercial debt financing provided by JPMorgan Chase and Goldman Sachs, to build a massive rare earth magnet manufacturing complex in Texas.

During the same period, USA Rare Earth signed a non-binding letter of intent with the US Department of Commerce to obtain $1.6 billion in government funding under the CHIPS and Science Act program.

The funding package includes a guaranteed loan worth $1.3 billion in addition to $277 million in federal funding, in exchange for the US government receiving a 10% equity stake along with additional options to purchase future shares.

The investment aims to accelerate mining, processing, and refining operations for heavy rare earth elements at the Round Top project in Texas, with commercial production expected to begin by 2028.

ReElement Technologies is also seeking to strengthen its position within the emerging Western rare earth supply chain through agreements related to heavy mineral processing and alloy production in North America.

The company signed long-term supply agreements with Canadas Saskatchewan Research Council to provide neodymium-praseodymium, dysprosium, and terbium, in addition to developing metal and alloy production facilities for defense applications in Ohio.

It also signed agreements to source raw materials from projects in Greenland and the US state of Montana as part of an integrated strategy targeting US defense and industrial markets.

Europe moves to reduce dependence on China

In Europe, the European Union is seeking to overcome Chinese dominance over rare earths through the Critical Raw Materials Act, which places limits on dependence on any single country within supply chains.

The EU is investing heavily in extraction, processing, and recycling operations within Europe, while also launching a list of strategic projects and signing partnerships with resource-rich Western allied nations.

The European Commission is also implementing coordinated defense strategies through initiatives such as the Resource EU Plan, backed by funding of up to 3 billion, aimed at coordinating demand, conducting supply chain stress tests, and carrying out joint purchases of critical minerals among member states.

European law also requires that at least 25% of the EUs strategic raw materials come from recycling by 2030.

At the same time, European automotive and technology companies are developing products that do not rely on rare earth materials, including a shift toward motors that do not use permanent neodymium-based magnets, such as induction motors and synchronous reluctance motors, particularly in electric vehicles.