China’s tightening grip over the minerals that energy superior applied sciences has moved from long-term strategic concern to speedy financial risk—and the U.S. is woefully unprepared, Wharton’s Jeremy Siegel warned.
“It’s scandalous that we don’t have a rare earth strategic reserve,” Siegel informed CNBC’s Squawk Field Monday, calling it a serious safety failure. “We let China monopolize 90% of refining rare earth materials. Where were we, realizing the importance of these?”
Siegel urged the U.S. to construct a uncommon earth stockpile just like the Strategic Petroleum Reserve, which was created in 1975 after the Arab oil embargo left the nation uncovered to geopolitical blackmail.
His warning comes simply days after Beijing unveiled sweeping new export controls that might require firms worldwide to hunt Chinese language approval earlier than delivery 1000’s of merchandise containing even hint quantities of uncommon earths. The transfer despatched shockwaves by U.S. manufacturing and protection provide chains, which rely closely on Chinese language mineral processing.
However Treasury Secretary Scott Bessent stated Monday that President Donald Trump will nonetheless meet China’s Xi Jinping later this month and is able to reply “with whatever it takes” to counter China’s export restrictions.
Bessent, talking in a Fox Enterprise interview, stated there had been “substantial communication” between U.S. and Chinese language officers over the weekend and confirmed the much-watched Trump–Xi bilateral stays scheduled through the Asia-Pacific Financial Cooperation summit in South Korea in late October.
The assembly had been thrown into doubt after China abruptly moved to tighten exports of uncommon earth components: vital minerals utilized in superior weapons programs, electrical autos, wind generators, smartphones, and semiconductor manufacturing.
“This is China versus the world,” Bessent stated, warning Beijing had “pointed a bazooka at the supply chains and industrial base of the entire free world.”
Uncommon earths as leverage
Whereas the U.S. as soon as led the trade, refining shifted to China within the Eighties and Nineteen Nineties as a result of decrease prices and looser environmental regulation.
However the U.S. can also be scrambling to scale back its long-term reliance on Beijing. The Pentagon has funded new rare-earth processing amenities in Texas and California, whereas the Division of Power has backed partnerships with different suppliers equivalent to Lynas Uncommon Earths in Australia.
Beijing has repeatedly signaled willingness to weaponize its mineral dominance throughout geopolitical disputes. In 2010, it briefly halted rare-earth exports to Japan over a territorial disagreement within the East China Sea. Extra not too long ago, through the U.S.-China commerce struggle in 2019, Chinese language state media hinted uncommon earths could possibly be used as “China’s counterweapon.”
The announcement final week enraged U.S. officers. Trump initially threatened to cancel his assembly with Xi and unveiled plans for an extra 100% tariff on Chinese language items starting Nov. 1. The White Home has framed the transfer as retaliation for what it calls Chinese language “economic coercion.”
‘No matter it takes‘
Bessent stated Monday the U.S. would reply forcefully if China maintains its restrictions.
“We have plenty of straight brute-force countermeasures we can pull,” he warned.
He cited leverage over semiconductor software program exports, entry to U.S. monetary markets, plane parts from firms like GE and Honeywell, and even the presence of greater than 300,000 Chinese language college students learning at American universities.
He additionally hinted the U.S. could use export controls just like these deployed towards Huawei and China’s AI chip sector in 2022 and 2023, when Washington moved to choke Beijing off from superior know-how and chipmaking instruments.
“But we’re willing to do whatever it takes and to adopt whatever posture it takes,” Bessent stated. “As President Trump says, we do have more cards.”
The Treasury secretary stated the administration goals to rally assist from Japan, South Korea, India, Australia, and European allies, lots of whom additionally depend upon Chinese language refined minerals.
The problem is predicted to dominate discussions this week in Washington through the annual Worldwide Financial Fund and World Financial institution conferences, the place Bessent stated Chinese language and American officers will maintain lower-level talks.
Siegel, for one, expects the financial fallout to be momentary.
“Once it’s resolved, given all the other good things that are happening, I see no reason why we can’t continue on to new highs,” he stated, noting the S&P 500 was already rebounding after Friday’s selloff.
Fortune International Discussion board returns Oct. 26–27, 2025 in Riyadh. CEOs and international leaders will collect for a dynamic, invitation-only occasion shaping the way forward for enterprise. Apply for an invite.
