China’s tightening grip on minerals used by advanced technologies has gone from a long-term strategic concern to an immediate economic threat — and the United States is woefully unprepared, warns Wharton’s Jeremy Siegel.
“It’s a shame that we don’t have a strategic rare earth reserve,” Siegel said He said CNBC Squawk box Monday, describing it as a major security failure. “We allowed China to monopolize 90% of the refining of rare earth materials. Where were we after we realized the importance of these materials?”
Siegel urged the United States to build a rare earth reserve similar to the Strategic Petroleum Reserve, which was created in 1975 after the Arab oil embargo left the country vulnerable to geopolitical blackmail.
His warning comes just days after Beijing unveiled sweeping new export controls that require companies around the world to obtain China’s approval before shipping thousands of products containing even trace amounts of rare earth elements. The move sent shock waves through US manufacturing and defense supply chains, which rely heavily on Chinese metal processing.
But Treasury Secretary Scott Besent said Monday that President Donald Trump will meet with Chinese President Xi Jinping later this month and is ready to respond “with whatever it takes” to counter Chinese export restrictions.
Besant, speaking in A Fox Business interviewHe said there had been “substantial communications” between US and Chinese officials over the weekend and emphasized the highly-watched bilateral talks between Trump and Xi scheduled to take place during the Asia-Pacific Economic Cooperation summit in South Korea in late October.
The meeting has become in doubt after China He moved suddenly Tightening exports of rare earth elements: Critical minerals Used in advanced weapons systems, electric vehicles, wind turbines, smartphones and semiconductor manufacturing.
“This is China versus the world,” Besant said, warning that Beijing had “pointed a bazooka at the supply chains and industrial base of the entire free world.”
Rare earths as leverage
While the United States once led this industry, Refining transformation to China in the 1980s and 1990s due to lower costs and more flexible environmental regulations.
But the United States is also striving to reduce its long-term dependence on Beijing. The Pentagon has New financed Rare earth processing facilities in Texas and California, while the Department of Energy has supported partnerships with alternative suppliers e.g Lynas Rare Earth In Australia.
Beijing has repeatedly demonstrated its willingness to use its mineral dominance as a weapon during geopolitical disputes. In 2010, briefly to stop Exports of rare earth elements to Japan due to territorial dispute in eastern China sea. More recently, during the US-China trade war in 2019, Chinese state media suggested that rare earths could be used as an “anti-China weapon.”
This announcement last week angered American officials. Trump at first He threatened to cancel his meeting with Xi and unveil plans to impose an additional 100% tariff on Chinese goods from November 1. The White House framed the move as retaliation for what it called China’s “economic coercion.”
“Whatever it takes.”‘
Besant said on Monday that the United States would respond forcefully if China continued its restrictions.
“We have a lot of direct, brute countermeasures we can take,” he warned.
He pointed to the influence of semiconductor software exports, access to US financial markets, aircraft components from companies such as General Electric and Honeywell, and even the presence of more than 300,000 Chinese students studying at US universities.
He also hinted that the United States might use export controls similar to those deployed against it Huawei And China’s AI chip sector in 2022 and 2023, when Washington moved to stifle Beijing and deny it access to advanced technology and chip-making tools.
“But we are prepared to do whatever it takes and adopt whatever position it takes,” Besant said. “As President Trump says, we have more cards.”
The Treasury Secretary said the administration aims to garner support from Japan, South Korea, India, Australia and European allies, many of whom also depend on Chinese refined metals.
The issue is expected to dominate discussions this week in Washington during the annual meetings of the International Monetary Fund and World Bank, where Besant said Chinese and US officials will hold lower-level talks.
Siegel expects the economic repercussions to be temporary.
“Once the problem is resolved, given all the other good things going on, I don’t see any reason why we can’t continue to hit new highs,” he said, noting that the S&P 500 was already rebounding after Friday’s selloff.
https://fortune.com/img-assets/wp-content/uploads/2025/10/GettyImages-96217377-e1760373657451.jpg?resize=1200,600
Source link