The United States' Strategic Dependence on China's Dominance in Rare Earth Elements 2020-2023

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FORMOSA NEWS

U.S. Strategic Dependency on Chinese Rare Earths Driven by Downstream Processing Gaps

JAKARTA, Formosa News — A strategic dependency on China’s rare earth element supply chain has left the United States vulnerable in key high-tech and defense sectors between 2020 and 2023. The primary driver behind this imbalance is not a shortage of domestic mineral deposits, but rather a severe lack of U.S. industrial capacity in rare earth refining, separation, and downstream manufacturing. These findings were published in the Indonesian Journal of Contemporary Multidisciplinary Research (MODERN) by researchers Aflah Lutfiah Sungkar and Khoirunnisa from Universitas 17 Agustus 1945 Jakarta. The study highlights a critical vulnerability for U.S. economic and national security as global demand for critical minerals rapidly accelerates.

Rare earth elements represent a crucial group of minerals essential for powering modern technological and military applications. They are core components in F-35 fighter jets, radar systems, Virginia-class submarines, Tomahawk missiles, wind turbines, and electric vehicle motors. Between 2020 and 2023, global supply chain disruptions caused by the COVID-19 pandemic and escalating geopolitical rivalry prompted Washington to scrutinize its strategic dependencies. In response, the U.S. government issued Executive Order 14017 to assess supply chain resilience. Despite operating the Mountain Pass mine in California—one of the largest rare earth deposits outside China—the United States continues to export the vast majority of its raw mineral concentrates overseas for advanced refining.

To evaluate why this dependency persists despite policy interventions, the researchers conducted a qualitative study using secondary data analysis. The team analyzed official government documents from the United States Geological Survey (USGS) and the White House, alongside academic literature published during the 2020–2023 timeframe. Using Dependency Theory as an analytical framework, the study examined the structural inequalities within global mineral supply chains to explain how control over processing stages creates long-term strategic leverage.

The investigation revealed several key findings regarding the global rare earth supply chain:

• Processing Dominance Over Mineral Ownership: U.S. strategic dependence is caused by a lack of domestic refining and downstream processing infrastructure rather than a scarcity of unmined reserves.
• China's Unmatched Scale: China consistently dominated global production, increasing its rare earth oxide output from approximately 140,000 metric tons in 2020 to 240,000 metric tons in 2023.
• Control of Downstream Value Chains: China maintains control over key downstream manufacturing sectors, particularly the production of high-strength permanent neodymium and dysprosium magnets essential for clean energy and defense hardware.
• Limited Short-Term Impact of Legislative Reforms: Recent U.S. legislative measures, including the Inflation Reduction Act and the CHIPS and Science Act, have not yet closed the structural industrial gap required to achieve supply chain autonomy.

These findings demonstrate that raw material extraction alone cannot guarantee strategic independence without integrated downstream manufacturing capabilities. For policymakers, defense planners, and industrial leaders, the study underscores the necessity of building domestic separation, smelting, and magnet manufacturing facilities. Without substantial investment in processing technologies and strategic partnerships with allied nations, clean energy transitions and national defense readiness remain exposed to external supply disruptions.

Addressing the broader structural challenges in global trade, Aflah Lutfiah Sungkar and Khoirunnisa noted that mineral dominance enables economic leverage. "As long as China maintains its dominance in the processing and refining of rare earths, the United States will continue to struggle to achieve full self-sufficiency in the rare earths supply chain," the researchers stated in their publication.

Author Profiles

1. Aflah Lutfiah Sungkar, S.HI.

   Affiliation: Universitas 17 Agustus 1945 Jakarta, Field of Expertise: International Relations, Global Political Economy, and Critical Minerals Security

2. Khoirunnisa, S.I.P., M.Si.

   Affiliation: Universitas 17 Agustus 1945 Jakarta, Field of Expertise: Public Policy, International Relations, and Regional Studies 

Research Source Information

• Article Title: The United States' Strategic Dependence on China's Dominance in Rare Earth Elements 2020-2023
• Journal Name: Indonesian Journal of Contemporary Multidisciplinary Research (MODERN)Publication 
• Year: 2026 (Vol. 5, No. 4, pp. 541–556)
• DOI: https://doi.org/10.55927/modern.v5i4.49
• URL Jurnal: https://journal.formosapublisher.org/index.php/modern