Securing the Future: Rare Earth Pact Could Supercharge U.S. Military Tech

As U.S. and Chinese officials meet in London on June 9, 2025, to finalize a rare earth mineral trade agreement, National Economic Council Director Kevin Hassett’s assertion that a deal is “about to be closed” signals a breakthrough for U.S. defense capabilities.

With China controlling key rare earths essential for advanced military technologies, the agreement could ensure stable supplies for drones, fighter jets, and missile systems, aligning with 2025’s push for defense innovation.

Following recent talks between President Trump and Chinese President Xi Jinping, the deal underscores its strategic importance for U.S. national security amid persistent trade tensions.

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Strengthening Defense with Rare Earth Supplies

The U.S.-China rare earth deal seeks to lift China’s export restrictions on seven critical minerals, including dysprosium, terbium, and samarium, vital for high-performance magnets in defense applications.

China’s April 2025 export limits disrupted U.S. supply chains, jeopardizing production of systems like the F-35 jet and MQ-9 Reaper drone, which depend on rare earths for sensors and propulsion.

A 2025 Department of Defense report notes that 90% of U.S. rare earth magnet needs rely on Chinese suppliers, highlighting the deal’s urgency. By securing access, the U.S. could boost defense output, with Raytheon estimating a 12% production increase by 2027.

The deal follows China’s 90-day export suspension in May 2025, which temporarily alleviated shortages. With a $900 billion U.S. defense budget in 2025 emphasizing advanced technologies, stable rare earth supplies are critical for laser-guided munitions and satellite systems.

The agreement could reduce U.S. dependence on China, complemented by $1.5 billion in domestic investments, such as Lynas Rare Earths’ Texas plant, though full-scale production is years away. The deal’s success could accelerate military modernization, ensuring the U.S. maintains a technological edge in global defense.

Did you know?
Rare earth elements constitute up to 25% of the critical components in U.S. missile defense systems, underscoring their role in national security, per a 2025 Pentagon assessment.

Navigating Trade and Strategic Challenges

The London negotiations, involving Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, face obstacles, including U.S. restrictions on chip technology exports to China, which have strained talks. China’s export licensing requirements may limit the deal’s scope, potentially restricting access to heavy rare earths.

A 2025 Brookings Institution analysis suggests that incomplete agreements could leave U.S. defense supply chains vulnerable, urging partnerships with allies like Canada to diversify sources. Despite these challenges, the deal could cut production delays for hypersonic missiles, a 2025 priority, by 18%, according to defense industry projections.

Strategically, the deal aligns with U.S. efforts to counter China’s technological dominance, as seen in policies like the CHIPS Act. By ensuring the availability of rare earth materials, the U.S. could advance next-generation defense systems; however, achieving long-term resilience requires reducing reliance on Chinese processing.

The talks’ outcome will shape U.S. defense innovation, balancing immediate supply needs with efforts to build a sustainable, diversified supply chain in a geopolitically complex 2025.

Technical Insight

Rare earth magnets, utilizing elements like neodymium and dysprosium, deliver magnetic strengths exceeding 1.3 tesla, essential for compact defense systems. The deal’s effectiveness depends on securing minerals with purity levels above 99.9%, as impurities can reduce efficiency in high-precision military applications.