Over the course of mid-2025 to 2026, the Trump administration has rolled out a sweeping set of policy and investment measures designed to reshore and diversify U.S. defense critical mineral supply chains, with the explicit goal of breaking China’s long-held dominance over global production and processing of key industrial and defense materials including scandium, tungsten, and rare earth elements.
The coordinated push kicked off on July 20, when President Donald Trump signed a landmark executive order tightening restrictions on the Department of Defense’s ability to grant waivers for critical materials sourced from countries classified as U.S. adversaries: China, Russia, North Korea, and Iran. The order mandates that all such waivers will expire permanently on January 1, 2027, unless a contractor holds a formally approved plan to phase out materials from the four listed nations, while actively encouraging defense contractors to qualify new mineral suppliers based in the U.S. and allied partner countries.
Ten days later, on July 30, Trump issued a formal presidential determination under Section 101 of the Defense Production Act. This designation classified recoverable critical minerals, including tungsten scrap and spent battery material known as “black mass,” as scarce and essential to U.S. national defense, and directed the Secretary of Commerce to implement new restrictions on the export of these materials to preserve domestic supplies.
The most high-profile step of the initiative came on August 7, during a roundtable meeting with U.S. mining industry leaders. At the event, the administration announced more than $2 billion in new targeted investments to scale up domestic and allied-nation critical mineral production, while the U.S. Treasury formally welcomed the launch of new S&P Global reference prices for six key critical minerals: gallium, germanium, tungsten, antimony, neodymium, and praseodymium. The pricing framework is intended to underpin a broader critical minerals trade agreement with allied partners including Japan, Mexico, and the European Union, which will establish phased, mineral-specific price floors to support diversified, market-aligned supply chains.
Breaking down the $2 billion investment package, the single largest award is a $1.4 billion Department of Defense grant to California-based battery manufacturer Sila Nanotechnologies. The funding will support the expansion of the company’s silicon-carbon anode production capacity, as well as the construction of a new lithium-ion cell facility dedicated to supplying defense sectors, including satellites, drones, and munitions. The second-largest allocation, $400 million, will go to Australia’s Sunrise Energy Metals to develop the world’s first primary scandium mine. The project will secure a stable supply of high-heat aluminum alloys critical for manufacturing fighter jets and spacecraft components. Additional funding includes $150 million for Minnesota-based Niron Magnetics, a firm developing rare earth-free permanent magnets that eliminate reliance on Chinese processed rare earths, and $85 million for Standard Bauxite to produce refractory-grade bauxite for high-temperature defense components. Smaller grants have been allocated to projects focused on graphite, tantalum, niobium, and boron, alongside $180 million earmarked for mining education programs at U.S. academic institutions to build a skilled domestic workforce.
The U.S. push for supply chain independence comes in the wake of steadily tightening Chinese export controls on critical minerals over the past 18 months. After China first banned gallium, germanium, and antimony exports to the U.S. in December 2024, it expanded broader rare earth export restrictions throughout 2025, before extending dual-use technology controls to Japan in early 2026. Trade data shows the impact of these measures has been significant: in the first half of 2026, Chinese rare earth exports to Japan plummeted 51% year-on-year, with an 81% drop in June alone, and shipments of key heavy rare earths including dysprosium and terbium fell to zero. Over the same period, Chinese rare earth exports to the U.S. declined 28% year-on-year.
Chinese analysts and state-affiliated commentators have widely pushed back on the Trump administration’s timeline, arguing that the goal of fully decoupling U.S. defense supply chains from Chinese critical minerals by 2027 is unfeasible in the near term. In a commentary published by Guancha.cn, analysts noted that U.S. mining and processing firms have not yet built out sufficient capacity to replace Chinese supplies, pointing out that it is impossible for U.S. defense contractors to eliminate purchases of rare earths, tungsten, molybdenum, and tantalum from adversary nations in the lead-up to the 2027 deadline. The commentary added that the complexity of mineral refining has slowed progress on U.S. projects, leaving the foundations of Washington’s effort to challenge China’s rare earth supply chain dominance still underdeveloped, citing examples including a scaling challenge for rare earth refining startup ReElement Technologies and ongoing intellectual property litigation between two major U.S. rare earth firms, USA Rare Earth and MP Materials.
Tianjin-based political commentator Zui Qingfeng expanded on this criticism, noting that China built its dominant position in critical mineral processing over more than two decades, and the U.S. cannot replicate that entire industrial system in just a few years. China currently controls roughly 90% of global rare earth refining capacity, a position built on decades of investment in industrial infrastructure, and the U.S. has outsourced the polluting, long-cycle smelting and processing segment of the supply chain over the past 30 years, leaving gaps in technology, industrial capacity, and skilled labor. Zui Qingfeng estimated that rebuilding a complete, stable domestic supply chain would take the U.S. at least five years, and that American firms cannot avoid relying on Chinese rare earth supplies in the short term.
In recent weeks, China has also implemented new border control measures to protect its critical mineral technical expertise, with new exit and entry rules set to take effect on September 15 that will restrict travel for Chinese rare earth technicians with access to core technical knowledge, to prevent intellectual property leakage to foreign firms. Chinese commentator Big Octopus documented multiple past cases of foreign actors attempting to recruit Chinese rare earth experts to obtain restricted technical information, including a case where a Singaporean-linked headhunter offered a senior Ganzhou-based rare earth engineer a $300,000 annual salary and family green cards to elicit confidential production details, a 2025 incident where a Cayman Islands-registered firm attempted to obtain the restricted chemical mixing ratio for a common rare earth extraction agent from Inner Mongolian technical staff, and a cracked case involving a U.S.-funded Shenzhen headhunting firm that built a database of more than 1,000 Chinese rare earth and solar engineers to screen for potential recruitment.
Current U.S. Geological Survey data shows that while the U.S. remains heavily import-reliant for many critical minerals, its dependence on China is often overstated for key materials. For example, only 19% of U.S. gallium consumption comes from China, with the remainder sourced from Japan and other allied partners; 30% of U.S. yttrium imports come from non-Chinese suppliers including Germany, Austria, and South Korea; and most U.S. germanium imports are sourced from Belgium and Canada. Only heavy rare earths such as dysprosium and terbium remain overwhelmingly dominated by Chinese processing, a gap the U.S. already targeted with a $400 million investment in MP Materials in 2025. Overall, while the U.S. imports 80% of its rare earth supplies, only 56% of those imports come from China, meaning most can already be sourced from allied nations if needed. A March 2026 report from the U.S. National Association of Manufacturers underscored the scope of the challenge, finding that the U.S. is at least 50% import-reliant for 33 of the 58 minerals classified as critical to domestic manufacturing, with 13 of those minerals entirely supplied by foreign sources. The report called for a combined strategy of domestic capacity building and allied supply chain diversification to protect U.S. economic and national security.
