By using its most powerful trade weapon—control over rare earths—early in its conflict, China incentivized the world to develop alternative supplies. This move provides short-term gains but likely diminishes China's long-term strategic leverage.

For 30 years, China identified rare earths as a strategic industry. By massively subsidizing its own companies and dumping product to crash prices, it methodically drove US and global competitors out of business, successfully creating a coercive dependency for the rest of the world.

To counter China's dominance in rare earths, subsidies and tax credits are not enough. The US must also use tools like the Defense Production Act to create long-term, guaranteed demand contracts. This provides stability for private companies to withstand the price volatility caused by Chinese market manipulation and dumping.

To combat China's dominance in critical minerals, the Department of Energy is proactively funding dormant US resource companies. It provides a 'startup package' including an equity check, an expedited permit, and a guaranteed offtake agreement with a floor price to de-risk and fast-track projects.

To combat China's ability to dump products and destabilize markets, the US government should act as a buyer of last resort for critical materials like rare earths. This would create a strategic reserve, similar to the petroleum reserve, ensuring price stability for domestic investment and manufacturing.

China achieved its near-monopoly on rare earths not by chance, but through a long-term state-sponsored strategy. This involved providing capital to key firms, funding overseas acquisitions, banning foreign ownership of domestic mines, and consolidating the industry to control global prices.

Attempting to out-mine, out-process, and out-spend China in traditional rare earth production is a losing strategy. The U.S. can gain an advantage by investing in breakthrough technologies that bypass China's existing chokehold on the supply chain.

China maintains dominance not by restricting supply, but by demonstrating its ability to flood the market at will. This uncertainty makes new Western mining projects financially non-viable without significant government support like price floors or guaranteed offtake agreements, effectively killing competition before it starts.

The key to breaking China's monopoly on rare earths isn't just sourcing minerals, but creating a commercially viable market. The US government is actively negotiating demand-side pricing deals with allied nations to counteract Chinese subsidies, recognizing that fixing the pricing mechanism is as critical as securing the physical supply.