Bloomberg: US is losing the rare earths race — to itself

In a searing opinion piece, Bloomberg lays bare the contradictions at the heart of U.S. policy on rare earths, exposing how political posturing and energy denialism risk undermining America’s national security. Despite rhetoric about standing up to China, the U.S. — particularly under President Donald Trump and his allies — continues to act like a geopolitical supplicant when it comes to critical minerals.

Rare earth magnets, central to both cutting-edge military hardware and the booming clean energy sector, are at the core of the crisis. These ultra-strong components are indispensable to everything from F-35 fighter jets and Tomahawk missiles to electric vehicles and wind turbines. Yet about 90% of their global production still comes from China — a vulnerability the U.S. has long recognised but done little to correct in a consistent way.

Bloomberg notes the irony of Trump pleading with Chinese President Xi Jinping to ease rare earth export restrictions, even as his congressional allies move to gut the very legislation — Joe Biden’s Inflation Reduction Act (IRA) — that aimed to make the U.S. more self-reliant. While the White House frames rare earths as a matter of national security, Trump's policy framework betrays this by simultaneously sabotaging the civilian clean energy industries that are essential to sustaining a domestic supply chain.

The article underscores how the military’s actual consumption of rare earths — likely less than 1% of global demand — means any secure U.S. production base must be driven by the much larger green energy market. Biden’s IRA, mocked by opponents as wasteful, actually served a dual-purpose: climate transition and defence preparedness. It allocated billions in funding and loans to revive domestic mining and processing facilities, creating a fragile but real foundation for rare earth independence.

Progress has been made. The Mountain Pass mine in Nevada is now refining rare earths domestically, while MP Materials and e-VAC are opening the first two U.S.-based rare earth magnet factories. Together, these could theoretically cover the Pentagon’s needs. European companies and South Korea’s Posco are also investing in U.S.-based capacity, with output expected to scale by 2026.

But all this could collapse under the weight of GOP-led budget cuts and the unraveling of the IRA. Bloomberg warns that killing the financial lifeline for clean energy would not only halt the energy transition — it would also bankrupt the very companies building out America’s critical minerals supply. In effect, Washington’s incoherence would push supply chains back into Beijing’s hands, amplifying strategic vulnerability in any future conflict or trade war.

In conclusion, Bloomberg delivers a scathing verdict: Trump’s rare earth diplomacy is not just hypocritical, it’s self-defeating. By undermining the clean energy industries that underpin strategic independence, the U.S. risks becoming not a rival to China — but a desperate customer.

By Vugar Khalilov