Pain or gain? US moves to decouple its defence industry from China’s rare earths

A recent US executive order aims to decouple the nation's defense industry from China's rare earth minerals, ending its long-standing reliance on cheap minerals from the country. This directive, signed on July 20 by US President Donald Trump, focuses on tracing major arms manufacturers' supply chains and phasing out Chinese rare earths to strengthen national security.

While some contractors face immediate challenges in requalifying suppliers and finding alternatives, industry observers view the policy as a necessary enforcement measure rather than a radical shift. The order tightens conditions for the Department of Defence to issue waivers for defense-critical imports from adversary states, including China, Russia, Iran, and North Korea.

To qualify for waivers, companies must submit formal mitigation plans, demonstrating extensive efforts to source compliant materials, set strict implementation timelines, and map their comprehensive supply chains within 180 days. The order mandates that defense contractors identify components "from raw materials to end products" and outlines the era of easy waivers is over.

Although experts warn that finding feasible non-Chinese alternatives poses practical challenges, including the administrative burden of tracing deep-tier supply chains and locating reliable sources, the White House asserts that the adjustments are manageable and will not compromise current military readiness. The primary goal of this policy is to diversify military supply chains and reduce reliance on foreign critical materials, particularly as the US prepares to restock ammunition for its war with Iran and scale up production of strategic bombers and missiles.