China controls roughly 90 percent of the world's rare-earth refining capacity. This 16-page capstone argues that tariffs alone cannot close the U.S. processing gap, and sets out what could.
The argument
Rare earths are not scarce in the ground. The bottleneck is refining, and that capacity sits almost entirely in one country. A tariff raises the price of the imported product without creating a domestic alternative, so on its own it leaves the supply chain exactly as exposed as before, only more expensive.
The paper treats the problem as an industrial-policy question rather than a trade one: where can processing capacity be built, who pays for it, and how does the United States bridge the years it takes to come online.
What the paper recommends
- Foreign direct investment in allied producers. Back refining capacity in partner countries with reserves and a lower cost base, naming Brazil, Vietnam, and India, so that supply diversifies faster than a domestic build-out alone could manage.
- A strategic stockpile modelled on the Strategic Petroleum Reserve. Hold processed rare earths, not just ore, to cover the lag between a supply shock and new capacity coming online.
- Sustained R&D into substitutes. Fund research on materials and designs that reduce rare-earth intensity in magnets and electronics, which lowers exposure regardless of who controls refining.