Why It Matters

The United States is structurally exposed to one of the most consequential material dependencies in modern defense and technology: the rare earth elements (REE) supply chain. A newly updated Congressional Research Service (CRS) report makes clear that despite a flurry of executive action and billions in new federal commitments, the gap between U.S. ambition and actual supply chain resilience remains wide.

The core issue is that China mines roughly 60% of global rare earth elements, processes and separates about 90%, and manufactures approximately 94% of REE-based magnets. The United States, meanwhile, was 67% net import reliant for most REEs in 2025, and 100% reliant on foreign sources for scandium and yttrium, two elements with direct defense applications.

The Big Picture

What's Driving Congressional Attention

Rare earth elements aren't rare in the Earth's crust, but the challenge is that extracting, processing, and separating them is technically complex, expensive, and concentrated in ways that leave the U.S. exposed. High-grade REE deposits are typically less than 10% by weight concentration. The minerals often contain multiple elements bound tightly together, along with thorium or uranium, which adds regulatory and disposal costs on top of already demanding chemistry.

The U.S. Geological Survey (USGS) 2025 Critical Minerals List includes most REEs, excluding promethium, citing their economic and security essentiality alongside vulnerable U.S. supply chains. That designation matters because it triggers federal attention, funding, and policy responses across multiple agencies.

REEs are essential inputs for satellite communications, guidance systems, aircraft structures, fly-by-wire systems, and smart missiles. The specific elements involved, including neodymium, europium, terbium, dysprosium, yttrium, and others, are precisely the ones China has moved to restrict.

China's Escalating Leverage

In 2023, China banned the export of REE processing and refining technologies. In 2025, it announced export controls on samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These are elements that sit at the center of U.S. defense manufacturing and clean energy supply chains.

China's 2025 mine production reached 270,000 metric tons of rare earth oxide equivalent. The U.S. produced 51,000 metric tons total, from just two active mines, one in Mountain Pass, California, and one in Georgia. China's estimated reserves stand at 44 million metric tons. U.S. reserves are estimated at 1.9 million metric tons.

The processing gap is arguably more consequential than the mining gap. Even if the U.S. dramatically expanded domestic rare earth mining, it currently lacks the separation and processing infrastructure to convert raw ore into the high-purity metals needed for magnets and defense components. That's the stage where China holds its most decisive and durable advantage.

The Federal Response

Congress and the Trump Administration have directed the USGS, the Department of Energy (DOE), and the Department of Defense (DOD) to advance research, extraction, processing, and recycling across the REE supply chain. The federal government has also been working with private companies and select foreign partners to build out alternatives.

In July 2025, the DOD established a public-private partnership with MP Materials, which operates the Mountain Pass mine, under which DOD will acquire $400 million in company stock, extend a $150 million loan for heavy REE separation expansion, and commit to an REE price floor, offering direct payments to MP Materials if neodymium-praseodymium prices fall below $110 per kilogram.

In January 2026, the Trump Administration announced a critical mineral trade zone, investments in USA Rare Earth, and a critical minerals ministerial. On February 2, 2026, the White House announced Project Vault, a $12 billion initiative to establish a U.S. Strategic Critical Minerals Reserve. USA Rare Earth has indicated it may supply REEs to the stockpile.

Political Stakes

For the Administration

The Trump Administration has framed the rare earth elements U.S. supply chain challenge as a national security emergency, with the DOD operating under Executive Order 14347, dated September 5, 2025, using a secondary Department of War designation to pursue its mine-to-magnet supply chain goal by 2027. That framing gives the administration broad authority and political cover for interventions that would otherwise look like industrial policy.

The DOD price floor for neodymium-praseodymium is an unusual market intervention. If it works, the administration can point to it as a model for de-risking domestic critical minerals investment. If prices stay elevated and direct payments are never triggered, it costs less. If prices collapse and payments flow, it opens the administration to criticism of subsidizing a single company.

Project Vault's $12 billion price tag is the more politically exposed commitment. Strategic reserves are defensible in principle, but the scale and speed of the initiative will draw scrutiny over contracting, pricing, and which companies benefit.

For Congress

The CRS report flags multiple bills with overlapping but distinct approaches. H.R. 2969 and S. 1463 would authorize the Secretary of the Interior to enter into agreements with foreign countries for scientific cooperation on critical mineral mapping. S. 429 would address REE supply through trade and strategic partnerships. S. 789 would pursue global resource assessments and technology partnerships.

On the reserve side, H.R. 7126 and S. 3659 would establish a U.S. strategic resilience reserve, while H.R. 6696 and S. 2839 would create a critical minerals security alliance. S. 2550 would provide a framework for international cooperation on secure supply chains.

The legislative landscape reflects a genuine bipartisan recognition that the status quo is untenable, but no clear consensus on which tools, which partners, or which timelines are adequate. Congress also faces the question of whether executive actions already underway, including the DOD-MP Materials partnership and Project Vault, are sufficient or whether statutory backing and additional funding are required.

For Democrats

Domestic mining expansion and processing investment align with supply chain resilience and manufacturing job arguments. But accelerated permitting and reduced environmental review, which are likely prerequisites for rapid domestic REE development, cut against environmental priorities. How Democrats navigate that tension will shape whether bipartisan legislation advances or stalls.

For the Public

The magnets that depend on neodymium, terbium, and dysprosium are in electric vehicles, MRI machines, wind turbines, and consumer electronics. Export controls from China on these elements affect the cost and availability of products across the economy.

The Bottom Line

The CRS report is a detailed accounting of how far the United States remains from a resilient rare earth elements supply chain, even as the current administration has moved more aggressively than any predecessor to close the gap. The federal government is now an equity holder in a rare earth mining company, has committed to a commodity price floor, and is building a $12 billion strategic reserve.

With only 1.9 million metric tons in domestic reserves against China's 44 million, and with processing and separation infrastructure still heavily concentrated abroad, the U.S. path to resilience runs through allied partnerships, processing investment, and sustained federal commitment over years, not a single executive action or legislative cycle.

Congress's core decision is whether the current executive-driven approach is moving fast enough, and whether it needs a statutory structure and appropriations to survive changes in administration or market conditions.

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