Washington has a habit of turning strategic problems into procurement problems. If only the permitting moved faster. If only more capital flowed in. Get those right, the thinking went, and the market would handle the rest.
It won’t. It can’t. Because there is no free market here to handle anything.
The global trade in critical minerals has never operated on the terms economists prefer. Deliberate overproduction and dumping are designed to kill competitors before they reach scale. When the competition folds, prices recover, dependence hardens and Beijing holds the lever. Private investors draw the rational conclusion that betting against a state-backed producer is a losing proposition. They’re right.
But something has changed. China is not just manipulating prices anymore. It is winding down raw material exports by design.
The reason is simple. A kilogram of dysprosium sold as powder earns hundreds of dollars. The same kilogram incorporated into an electric vehicle motor helps sell a $40,000 car. Countries seeking export revenue sell commodities. Countries seeking industrial dominance sell finished products.
On April 4, 2025, Beijing placed seven heavy rare earth elements — terbium, dysprosium, yttrium, scandium, and three others — under mandatory export licensing. Several carmakers cut production within weeks.
In October, Beijing expanded the controls to five additional elements. When November brought a partial suspension, the industry exhaled. The original April regime was never touched — Beijing suspended only the October expansion. Terbium, dysprosium and yttrium still require case-by-case Ministry of Commerce approval for every shipment, and approvals for defense applications have largely not come.
“It hasn’t been fixed,” Kevin Michaels, a defense aerospace consultant, told Politico’s NatSec Daily. “Yttrium is used in almost every jet engine, and manufacturers have been finding caches of suppliers here and there and are doing workarounds, but the yttrium has not started flowing from China yet.” Bradley Martin of RAND read the delay the same way: “Where there’s slow-rolling, it’s a signal, not a glitch.”
Mark Smith, chairman and CEO of NioCorp Developments, which is working to bring a rare earth mine online in Nebraska, sees the pattern clearly. Evidence increasingly suggests Beijing’s strategy is to reserve critical minerals for domestic manufacturing rather than continue supplying Western industry. “Some Western leaders keep treating each new Chinese export restriction as a bargaining chip,” Smith wrote recently. “That is the wrong way to read what is happening.” The restrictions aren’t leverage. They’re a door being closed.
Made in China 2025 was explicit about exactly this ambition: own the entire chain. Beijing said so out loud, and has spent the decade since building the supply chain to prove it.
The price data reflects what the licensing data confirms. As of early 2026, dysprosium oxide traded at $191 per kilogram inside China, versus $317 for export. Terbium: $803 inside China, $1,182 for export. That isn’t a tariff inefficiency. It’s the architecture of a market being deliberately severed.
China’s heavy rare earth deposits have been thinning for over a decade. To supplement domestic supplies, Beijing has relied on imports from Myanmar, where instability and mining disruptions have added uncertainty. A country raising export barriers while its own reserves shrink is not behaving like a commercial exporter. It’s rationing.
The military stakes are compounding. Dysprosium and terbium, often less than one percent of a finished magnet by weight, allow those magnets to hold their strength under engine heat. Without them, as Smith puts it, “modern weapons and nearly every EV on the road either degrade or simply stop working.” Defense manufacturers are being pressed to rebuild depleted munitions stockpiles and supply new programs like the “Golden Dome” anti-missile system — all while the inputs those systems require aren’t reliably flowing.
The Pentagon’s January 2027 ban on Chinese-made magnets — covering an estimated 78 percent of U.S. weapons programs, from F-35 fighters to nuclear submarines — is the clearest acknowledgment that this is no longer a trade problem. It’s a readiness problem. And the clock is running.
The Trump administration is moving: faster permitting, equity stakes in mining ventures, a proposed allied trade framework with enforceable pricing mechanisms. Congress has a targeted fix on the table — the bipartisan Critical Minerals Investment Tax Modernization Act, which would raise the depletion allowance for rare earths and scandium from 14 to 22 percent. In capital-intensive mining, after-tax returns determine whether projects get financed or shelved.
None of these measures closes the gap overnight. But waiting for Beijing to reopen a door it is deliberately closing isn’t patience. It’s denial.
For two decades, American policymakers assumed access to critical minerals was primarily a question of supply. China’s strategy suggests the real competition is over where value is created. The country that mines dysprosium matters. The country that turns it into magnets, motors, aircraft components, and weapons matters more. Beijing built a strategy around that distinction. Washington still treats it as a supply-chain problem.
James Carter is a principal with Navigators Global and a policy advisor with America’s Economy First. Previously, he served as a deputy assistant secretary with the U.S. Treasury (2002-06).
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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