The US trade war with China has a major sticking point: rare earth minerals.

China increased its restrictions on its rare earth exports Thursday, leading US President Donald Trump to threaten economic retaliation and imply he would cancel a meeting with Chinese President Xi Jinping during an upcoming visit to Asia.

The tussle over rare earths precedes the current administration; China for years has built up near-total control of the minerals as part of its wider industrial policy.

China’s restrictions are also seen as a response to Trump’s “reciprocal tariffs” on Chinese goods announced in April. After agreeing on a trade truce in Geneva, US officials had expected China to ease export restrictions on those minerals.

Here’s what you need to know about rare earths.

What are rare earths, and are they actually ‘rare?’

Rare earths include 17 metallic elements in the periodic table made up of scandium, yttrium and the lanthanides.

The name “rare earths” is a bit of a misnomer, as the materials are found throughout the Earth’s crust. They are more abundant than gold, but they are difficult and costly to extract and process and are also environmentally damaging.

What are rare earths used for?

Rare earths are ubiquitous in everyday technologies, from smartphones to wind turbines to LED lights and flat-screen TVs. They’re crucial for batteries in electric vehicles, as well as MRI scanners and cancer treatments.

Rare earths are also essential for the US military. They’re used in F-35 fighter jets, submarines, lasers, satellites, Tomahawk missiles and more, according to a 2025 research note from CSIS.

Where do rare earths come from?

Sixty-one percent of mined rare earth production comes from China, according to the International Energy Agency, and the country controls 92% of the global output in the processing stage.

There are two types of rare earths, categorized by their atomic weights: heavy and light. Heavy rare earths are more scarce, and the United States doesn’t have the capability to separate rare earths after extraction.

“Until the start of the year, whatever heavy rare earths we did mine in California, we still sent to China for separation,” Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, told CNN.

A dump truck moves raw ore inside the pit at the Mountain Pass mine, operated by MP Materials, in Mountain Pass, California, on June 7, 2019.

Joe Buglewicz/Bloomberg/Getty Images

However, the Trump administration’s announcement of sky-high tariffs on China in April derailed this process. “China has shown a willingness to weaponize” America’s reliance on China for rare earth separation, she said.

The US has one operational rare earth mine in California, according to Baskaran.

Why do rare earths matter in the trade war?

Beijing is using rare earths as major leverage in the trade war, and its latest restrictions come as Xi and Trump are scheduled to meet at the APEC summit in South Korea later this month.

In its most recent move, China added five rare-earth elements – holmium, erbium, thulium, europium, ytterbium, and related magnets and materials – to its existing control list, requiring export licenses. That makes the total amount of restricted rare earths to 12. China will also require licenses to export rare earth manufacturing technologies out of the country.

It’s not the first time this year that Chinese restrictions on rare earths have angered Trump. In June, Trump said on Truth Social that China violated a trade truce as Beijing kept its export controls on seven rare earth minerals and associated products.

The export controls could have a major impact, since the US is heavily reliant on China for rare earths. Between 2020 and 2023, 70% of US imports of rare earth compounds and metals came from the country, according to a US Geological Survey report.

But it’s China’s latest restrictions that are seen as a dramatic escalation in Trump’s trade war between the world’s two biggest economic powers.

“Dependent on what China says about the hostile ‘order’ that they have just put out, I will be forced, as President of the United States of America, to financially counter their move,” Trump wrote on Truth Social Friday.

“For every Element that they have been able to monopolize, we have two,” he added.

CNN’s Nectar Gan, John Liu, Donald Judd, Kylie Atwood, Phil Mattingly and David Goldman contributed to this report.