February 9, 2026: Last year the United States imposed high tariffs on China in retaliation for theft of intellectual property and unfair trade practices. China responded with, among other things, cutting off the supplies of some rare earths, particularly samarium, which is used for essential components of many American weapons and aircraft. Currently Chins produces 85 percent of the rare earths. There are 17 rare earths but only a few of them are critical ingredients for military and commercial products.

To deal with the shortage the U.S. government and individual manufacturers improvised by seeking out firms in the United States and the rest of the world that had stockpiles of rare earths. It was known that many companies that used rare earths, or had used them in the past, had unused surpluses of rare earths that were kept in storage. Rare earths are expensive, but they don't take up much space or require special environmental controls. Just put them in closed metal containers and store them indoors. Another source of rare earths was resuming mining and refining of vast rare earth deposits in the United States. Environmental regulations and the high cost of mining and refining compared to the cheaper Chinese rare earths could be solved. New extraction and refining methods do not violate environmental laws and government subsidies would enable U.S. firms to profitably provide rare earths for use by American companies.

This was not the first time the United States had a rare earth crisis. Twelve years ago the U.S. Department of Defense granted the manufacturer of the new F-35 fighter a waiver for having some illegal Chinese components in newly built F-35s. The cheap Chinese components were nothing exotic; they were $2 magnets and some similar materials. These items inadvertently got into the supply chain as a Japanese subcontractor that built parts of the aircraft. An audit later discovered the Chinese parts. The manufacturer told the Department of Defense that it would cost over $10 million and weeks, if not months, to take apart the offending assemblies, replace the Chinese items with American ones and reassemble, test and reinstall everything. The Department of Defense decided to let it go to keep the much-delayed F-35s coming.

Since the 1970s the U.S. has had laws banning any foreign components in American weapons. But once more American politicians and Americans in general are reminded that complex systems, including weapons, are made from components manufactured all over the world. Ironically the cheap magnets involved in the F-35 are used in several American weapons systems in addition to the F-35. These specialty magnets tend to come from China. In some cases, China is the only supplier. These magnets are made from rare earths, metals like cerium, europium, lanthanum, neodymium and yttrium. The United States used to manufacture some of these components, but China did it cheaper, and most manufacturing shifted to there over the last few decades.

This dispersal of components to nations throughout the world is nothing new. It has been going on since the 1960s. Some nations have specialized in certain components, especially electronics, to such an extent that a local disaster could cause global shortages. This happened in 1999, when severe earthquakes in Taiwan shut down factories that produced the majority of the world supply of some computer components. There were worldwide shortages for months. There have been several less striking incidents since then. Same thing happened when record floods in Thailand shut down plants producing a large portion of the worldwide personal computer hard drive supply.

As China has become a major industrial manufacturer, they have, like neighbors Taiwan, Japan and South Korea, come to concentrate on certain items, and acquire a world monopoly via lowest price and reasonable quality. Western nations, especially the United States and Germany, have the largest number of these mini monopolies. But what the American legislators were worried about was war with China, and an instant shortage of key weapons components. It could take months, or years, to restore necessary supply quantities.

During the Cold War, there were war reserves of certain raw materials, and subsidies to keep American firms manufacturing certain components. But since the Cold War ended in 1991, there has been an enormous growth in electronic and specialty metal components. Many of these are now largely made in foreign countries, particularly Taiwan, Japan, South Korea and China. A lot of those Cold War subsidies and stockpiles were done away with after the Cold War ended in 1991. But the use of only American components laws stayed on the books and caused more and more problems.

Trying to stockpile some items is more expensive than just having a lot of them sitting in a warehouse. Many manufactured items become obsolete rapidly, so many of these warehouses would suddenly be full of scrap, as they were made obsolete by new technologies. Any solution is going to cost billions, and it's unlikely the Department of Defense will be eager to give up a chunk of its budget to prepare for a long war no one wants.

China reminded the world how this worked in 2010 when it halted exports of rare earths. Two months later China resumed shipments. China was trying to use its near monopoly on the production of rare earth metals to jack up prices. The reaction from the rest of the world was vigorous and hostile. Rare earths are ores that are found in tiny quantities all over the world. Because they are expensive to mine, many mining companies don't bother. But in the last century, more and more rare earths have been found to have useful applications in metallurgy, electronics and other areas. In the last few decades, China has extracted rare earths more cheaply than anyone else and driven nearly all foreign rare earth mining operations out of business. But because of the new Chinese threat, other countries are reviving their rare earth mining operations, even if it requires government subsidies and relaxed environmental regulations. Despite these efforts it’s still cheaper and easier to get items made with rare earths from China.