China’s abrupt decision in April 2025 to tighten export licenses on several heavy rare earth elements, including dysprosium and terbium, was a jolting reminder of Beijing’s leverage over essential materials for defense and high-tech industries (Reuters, 2025). The new curbs, ostensibly retaliation for U.S. trade measures, underscored China’s willingness to weaponize its dominance in critical minerals, which it had also done in the past against Japan (Reuters, 2025). Given that China still processes nearly 90% of the world’s rare earths into magnets for everything from electric vehicles to missiles (Reuters, 2024), the move sent Washington and Tokyo scrambling to reinforce their supply lines. Both allies have responded with an tone of clear urgency, framing access to these resources as a strategic imperative and accelerating plans to achieve supply chain independence.
The United States has treated China’s minerals squeeze as a Sputnik moment for industrial policy. In January, President Donald Trump declared a national energy emergency, an unprecedented step expanding executive powers, which explicitly included critical minerals in its scope (White House, 2025). This declaration was followed in March by a sweeping executive order invoking emergency authorities under the Defense Production Act to boost domestic mining and refining of strategic minerals (Baskaran & Schwartz, 2025). The order fast-tracked permits for new mines on federal land and unlocked Defense Production Act funding to rapidly expand U.S. processing capacity (Baskaran & Schwartz, 2025). In practical terms, the Pentagon can now channel Title III DPA funds into projects that build out a full “mine-to-magnet” supply chain on American (or allied) soil, from rare earth extraction and separation to the manufacture of high-performance magnets needed for jets and missiles. At the same time, U.S. agencies have been directed to expand strategic stockpiles and use long-term purchase contracts to guarantee demand for nascent domestic producers, insulating them from China’s price undercutting (Reuters, 2024). Congress has lent support as well, for instance by enabling multi-year supply contracts through the National Defense Stockpile and setting a 2027 deadline to eliminate Chinese components (Reuters, 2024). Taken together, these measures amount to a “war-footing” mobilization of American industrial capacity, a concerted effort to ensure that critical materials remain available for national defense and infrastructure even under geopolitical duress.
Japan, having learned hard lessons from China’s rare earth embargo in 2010, was already ahead in fortifying its critical mineral supply. Over the past decade it slashed its dependence on Chinese rare earth imports from over 90% to around 58% by pursuing a multifaceted strategy – backing alternative mines abroad, recycling materials, and stockpiling rare metals as a national reserve (Seth, 2024). A little-known but powerful instrument in this effort is JOGMEC, Japan’s state-run minerals and energy agency, which has poured funding into overseas projects and secured long-term supply contracts to shield Japanese industry from supply shocks (Seth, 2024). In the wake of China’s latest move, Tokyo announced plans to add to its strategic stockpiles of rare earths and critical metals, aiming to guarantee its automakers and defense contractors a buffer against any export ban. Crucially, the United States and Japan are also working in tandem as allies. A bilateral critical minerals agreement signed in 2023 laid the groundwork for cooperation on electric-vehicle battery metals and set shared standards for secure supply chains (USTR, 2023). Now the two nations are elevating this coordination: officials have formed a joint task force to align their investment and stockpiling initiatives, including co-financing new mines and processing facilities in friendly countries and ensuring reciprocal access to each other’s funding tools like the U.S. Development Finance Corporation and Japan’s JOGMEC (Barker, 2024). Both have also engaged a broader coalition, partnering with resource-rich allies such as Australia and Canada, to support new non-Chinese sources through measures like offtake agreements (long-term purchase guarantees) and subsidy schemes that blunt Beijing’s ability to manipulate market prices (Barker, 2024).
The overarching goal for Washington and Tokyo is to create an independent supply chain for critical minerals that no single power can choke off. By jointly stockpiling materials, investing in diversified production, and sharing technology, the U.S. and Japan are fortifying what can be described as an economic Article 5: an attack on one nation’s resource supply will prompt a unified allied response. It is a quietly revolutionary shift. A decade ago, China’s near-monopoly in rare earths was taken as a given; today, America and its allies are treating materials security as integral to national security. In doing so, they seek to neutralize the geopolitical weaponization of resources, ensuring that the clean-energy and defense innovations of the 21st century are built on foundations that Beijing cannot upend. The race is on to achieve this new supply chain sovereignty by 2027, a deadline by which the allies aim to have severed their reliance on Chinese critical minerals (Reuters, 2024). The coming years will test whether this war-footing strategy can truly counter China’s dominance, but it is already clear that the free world is no longer complacent about the minerals undergirding modern power.
References:
Barker, A. (2024). Critical minerals need insulation from China’s market manipulation. Australian Strategic Policy Institute.
https://www.aspistrategist.org.au/critical-minerals-need-insulation-from-chinas-market-manipulation/
Baskaran, G., & Schwartz, M. (2025). The consequences of China’s new rare earths export restrictions. Center for Strategic and International Studies.
https://www.csis.org/analysis/consequences-chinas-new-rare-earths-export-restrictions
Reuters. (2024). Brazil joins race to loosen China’s grip on rare earths industry. Reuters News, June 17, 2024.
https://www.reuters.com/markets/commodities/brazil-joins-race-loosen-chinas-grip-rare-earths-industry-2024-06-17/
Reuters. (2025). China hits back at US tariffs with export controls on key rare earths. Reuters News, April 4, 2025.
https://www.reuters.com/world/china-hits-back-us-tariffs-with-rare-earth-export-controls-2025-04-04/
Seth, N. (2024). How to diversify mineral supply chains – A Japanese agency has lessons for all. Wilson Center New Security Beat.
https://www.newsecuritybeat.org/2024/08/diversify-mineral-supply-chains-japanese-agency-lessons/
United States Trade Representative (USTR). (2023). United States and Japan sign critical minerals agreement.
https://ustr.gov/about-us/policy-offices/press-office/press-releases/2023/march/united-states-and-japan-sign-critical-minerals-agreement
White House. (2025). Declaring a National Energy Emergency (Executive Order 14156, Jan 20, 2025).
https://www.whitehouse.gov/presidential-actions/2025/01/declaring-a-national-energy-emergency/
.svg){kind=icon}
