Xi Jinping's China freezes rare Earth exports, chokes tech-defence supply chains amid Donald Trump's tariff war, will this destroy US defence industry?

A new chapter in the ongoing US-China trade war has opened, this time over rare earth metals—key materials used in missiles, fighter jets, and modern technology. US President Donald Trump had started the trade war by raising tariffs on Chinese imports. In response, China has taken a more strategic step—banning the export of seven critical rare metals, including dysprosium and yttrium, according to reports.

These metals are vital for the US defence system. Yttrium is used in radar systems, lasers, and jet coatings, while dysprosium helps magnets function at high temperatures, essential for engines and missiles. Without these materials, the US may struggle to build its next-generation NGAD fighter jets.

Experts warn this could seriously impact not just America’s military strength but also high-tech industries. Rare earth metals are used in electric vehicles, smartphones, satellites, and medical devices. Last year, China had already restricted gallium exports—another metal important for semiconductors and AI systems.

Trump excluded certain items like smartphones and laptops from the tariff list to protect big American tech companies such as Apple, Dell, and Nvidia. But behind this move lies a larger issue: China controls the supply of most rare earth metals and is now using it as leverage.

Ports in China are facing delays as new licensing rules have been introduced for exporting rare earth magnets. China produces 90% of the world’s supply of these magnets, causing global disruption.

The US is trying to respond. Trump’s administration signed an order in March to boost domestic mining using the Defense Production Act. Still, experts believe it will take years to become self-reliant. Investors remain uncertain due to high tariffs and unclear long-term policies.

Meanwhile, prices of other critical minerals like antimony, hafnium, and rhenium are also rising sharply. Some are already four times costlier since 2024. China has started buying them aggressively, tightening global supply.