China’s increasingly tight control over the minerals that fuel America’s high technology is no longer a distant geopolitical concern: It is an economic threat that is already affecting American supply chains.
That’s the warning from Wilbur Ross, former US Secretary of Commerce in the Donald Trump administration, who claims that Beijing has learned to use rare earth minerals as leverage against the United States and may be preparing to use supply chains as a weapon even more.
“Rare earths are a very useful weapon for China,” the private equity mogul said in an interview with Fortune. “By giving up a little revenue, they get a very good return.”
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China does not control the majority of the world’s rare earth mines, but it dominates the refining and processing systems, where 90% of global capacity resides. These materials — some 17 obscure elements like neodymium — are essential inputs in electric vehicles, magnets, wind turbines, cutting-edge semiconductors, F-35 fighter jets and guided missiles.
Ross says U.S. vulnerability has been growing quietly for years, but only became visible after China introduced new export licensing requirements, which he calls a “system disguised as rationing.”
“They imposed a registration process, which is just a way to mask the controls,” Ross said. “Who knows how deliberately slow the approvers will be.”
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In other words, Ross believes China can now ration supply to American manufacturers without formally violating trade agreements.
“It is a very effective weapon… and it attacks our advanced technologies and national defense needs.”
Real risk of factory shutdowns
Ross warned that supply pressure could begin to affect American industry in six to 12 months unless trade tensions ease. Several automakers stockpiled rare earths at the start of the trade war, he said, but those reserves were just “a rounding error.”
“No one knows exactly how much excess rare earths American companies have accumulated,” he said. “But there would probably be some shutdowns if this impasse continues.”
Ford has publicly warned that it could be forced to idle at least one factory if rare earth supplies tighten further. And while this represents just a small portion of U.S. capacity, Ross says it could be the start of broader outages.
“Rare earths are used in fighter jets, rockets, all sorts of applications,” Ross said. “Basically, everything that requires advanced semiconductors generally needs rare earths.”
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Even small disruptions are critical due to modern manufacturing’s reliance on advanced chips. A typical American vehicle today 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
Asked about the possibility of a trade deal with China, Ross was skeptical.
“It’s not at all clear to me that China really wants a trade deal,” he said, adding that years of negotiations under the Trump and Biden administrations “haven’t yielded much.”
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Ross said Beijing sees no urgency to negotiate.
“[O presidente] Xi [Jinping] can continue to portray this as something the evil US is doing”, he explained, highlighting that China benefits politically by placing itself as a target of American aggression.
“So far, there hasn’t been enough pain inflicted on China for them to feel the need to get serious about negotiations.”
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The next front could be even more volatile. Lawmakers in Washington have considered restricting exports of advanced AI chips to China, but Ross warned that could trigger a dramatic escalation.
“Imposing an embargo is a very difficult thing to do. It could very well be interpreted as an act of war,” he said. “If we do this, China could block Taiwan.”
Such a move would paralyze global technology markets overnight. Taiwan Semiconductor Manufacturing Co. (TSMC) produces more than 90% of the world’s most advanced chips, including those used in US defense systems and cutting-edge AI.
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“It would be catastrophic,” Ross said.
Now, he believes the US is still pursuing a mineral conflict that China prepared years ago. Domestic processing plants are being built in the US and Europe, but they will not be operational quickly enough to eliminate the near-term risk.
“We have a time difference,” he said. “China is acting now.”
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