China’s tightening grip on the minerals that power American high technology is no longer a distant geopolitical concern: it is an economic threat already moving through American supply chains.
That’s the warning from Wilbur Ross, a former US Commerce Secretary under President Donald Trump, who says Beijing has learned how to use rare earths as leverage over the United States, and may be preparing to weaponize supply chains even more.
“Rare earths are a very useful weapon for China,” the private equity mogul said. luck In an interview. “By giving up a little bit of revenue, they get good bang for their buck.”
China does not control most of the world’s rare earth mines, but it dominates the refining and processing systems where 90% of global energy is located. These materials — some 17 obscure elements like neodymium and dysprosium — are essential inputs into electric cars, magnets, wind turbines, advanced semiconductors, F-35 fighter jets, and guided missiles.
Ross says vulnerabilities in the United States had been quietly accumulating for years, but only became visible after China introduced new export licensing requirements, what he calls a “disguised rationing regime.”
“They imposed a registration process, which is just a way to hide the controls,” Ross said. “Who knows how deliberately slow they are in issuing approvals.”
In other words, Ross believes China can now ration supplies to American manufacturers, and do so without formally violating trade agreements.
“It’s a very effective weapon…and it attacks our high-tech stuff and our national defense needs.”
Closing factories now poses a real danger
Ross warned that supply pressures could start to hit the US industry within six to 12 months unless trade tensions ease. He said many automakers stockpiled rare earths at the start of the trade war, but those reserves were only a “rounding error.”
“No one knows exactly how much excess rare earths American companies have accumulated,” he said. “But you will probably have some closures if this standoff continues.”
ford motor The company has already done so Publicly warned It may have to stop at least one plant if rare earth supplies shrink further. While that would represent only a small portion of US capacity, Ross says it could mark the beginning of broader unrest.
“Rare earths are used in fighter jets, missiles, all kinds of applications,” Ross said. “Basically, anything that requires advanced semiconductors usually needs some rare earth elements.”
Even small interruptions are important because of how much modern manufacturing relies on advanced chips. A typical American car now contains 400 to 500 semiconductors, and electric vehicles require even more, making rare earths a single point of failure for both the clean energy transition and national defense.
Ross: China has no “incentive” to negotiate
In response to a question about whether reaching a trade solution with China is realistic, Ross was skeptical.
“It is not at all clear to me that China really wants to reach a trade deal,” he said, adding that years of negotiations across both the Trump and Biden administrations had not yielded “much to show for it.”
Ross said Beijing does not see an urgent need to bargain.
“(President) Xi (Jinping) can continue to portray this as something the evil United States is doing,” he said, explaining that China benefits politically from portraying itself as a target of US aggression.
“So far, there has not been enough pain inflicted on China to feel the need to get serious about negotiating.”
The next front may be more volatile. Lawmakers in Washington have floated the idea of tightening exports of advanced artificial intelligence chips to China, but Ross warned that this could lead to a major escalation.
“Imposing a ban is very difficult,” he said. “This could be interpreted as an act of war.” “If we do that, China may impose a blockade on Taiwan.”
Such a move would paralyze global technology markets overnight. Taiwan Semiconductor Manufacturing Co., Ltd Company (TSMC) Makes more than 90% of the world’s most advanced chips, including those used in US defense systems and advanced artificial intelligence.
“That would be disastrous,” Ross said.
Now, it is believed that the United States is still playing catch-up in the mineral conflict that China has been preparing for for years. He added that local processing plants are being built in the United States and Europe, but they will not operate quickly enough to eliminate supply risks in the short term.
“We have a disruption in timing,” he said. “China is moving now.”
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