The U.S. defense industry is now reportedly paying five or more times the previous price for specific materials and seeking alternative sources, as a direct consequence of Beijing’s curb on exports.
U.S. Trade Representative Jamieson Greer has said that recent trade talks with China have focused on rare earth minerals, and the two sides have made progress in ensuring a steady supply of the critical elements to American shores.
“We’re focused on making sure that the flow of magnets from China to the United States and the adjacent supply chain can flow as freely as it did before the control,” Greer said at CBS’s Face the Nation program, which was aired on Sunday. “I’d say we’re about halfway there,” he added.
After U.S. President Donald Trump’s initial tariff salvo in April, China ordered its domestic suppliers to dramatically cut exports to the U.S. and other Western nations in a retaliatory move. Beijing resumed approving export requests in July after the U.S. agreed to make concessions in June following another round of trade talks.
In the interview, Greer said that Trump will make the final decision whether to extend the tariff truce beyond the Aug. 12 deadline. He added, “We’re working on some technical issues, and we’re talking to the president about it.”
However, a Wall Street Journal report suggests that China has yet to approve the flow of critical minerals for defense firms. The defense industry is now paying five or more times the previous price for specific materials and seeking alternative sources, as a direct consequence of Beijing’s curb on exports, according to the Journal, which cited several suppliers and defense executives.
China dominates the rare earth landscape, holding approximately 90% of the market share in magnet production. While rare earth shipments to the U.S. rose to 353 tons in June, compared to just 46 tons in May, they remained way below the levels seen before the export restrictions.
The U.S. is moving to reduce its dependence on Chinese rare-earth imports. In July, the Pentagon agreed to pay $400 million for a stake in MP Materials, the operator of the largest rare-earth mine in the Americas, which is ramping up production of magnets.
Retail sentiment on Stocktwits about MP Materials was in the ‘bearish’ territory at the time of writing.
Lockheed Martin CEO James Taiclet, speaking on an earnings call last month, called the deal “groundbreaking” and said it would help secure magnets critical for the F-35 fighter jet and cruise missiles. Still, officials have reportedly cautioned that building new supply chains will take time.
MP stock has more than quadrupled this year.
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