The U.S. Rare Earth Playbook Provides a Blueprint for Supply Chain Securitization

Washington is arming itself against weaponization of rare-earth-element supply chains. On August 24, the Department of Defense’s Economic Defense Unit (EDU) announced a $750 million offtake agreement with rare-earth-element producer Serra Verde, pre-committing to purchase key minerals like neodymium and terbium. The deal builds on the Development Finance Corporation’s (DFC’s) $565 million loan to Serra Verde earlier this year, pairing financing for production with guaranteed demand to provide new market entrants with greater stability to challenge China’s 90 percent market share. Throughout 2025, Beijing retaliated against U.S. tariffs with pending export controls on 12 of the 17 rare earth elements. In response, Washington has built out tools across government to encourage American producers to break China’s mineral chokehold. In the future, these evolving tools of U.S. economic statecraft could be used to break the range of supply chain dependencies on China that begin, but do not end, with rare earth elements. China controls the rare earth pricing mechanisms and has used that leverage to crush competitors. For instance, after rare earth prices spiked in 2010 and 2011, Chinese producers flooded the market and crashed prices, helping drive Molycorp — the only major U.S. rare earth miner at the time — into bankruptcy. Because of the threat of Chinese price manipulation, Western rare earth producers historically struggled to attract investor support. Serra Verde is the sole non-Asian producer of several rare earth elements. Since China’s introduction of export controls in 2025, Washington has fast-tracked new mining projects, eased permitting, and trimmed environmental review. It has also turned to overseas financing, expanding funding for rare earth projects through the DFC and in 2026 setting up the EDU within the Pentagon — letting the Department of Defense issue grants, options, and purchase commitments alongside loans and investments to support defense purchases. Serra Verde is the clearest case of these efforts converging, drawing support from both the DFC and the EDU. Rare Earth Element Supply Chains Are Only Part of the Problem While rare earth elements are important, there are other critical supply chains that require sustained policy commitment. The active pharmaceutical ingredients market, for example, is a roughly $270 billion market with a complex supply chain extensively linked to China. While analysts assess varied levels of Chinese control, reputable nonprofit scientific organization United States Pharmacopeia found that 41 percent of U.S.-approved active pharmaceutical ingredients are solely sourced from China. Potential Chinese restrictions on these exports, used as leverage in trade negotiations, could cost lives. Separately, China produces about 95 percent of dry shipping containers, monopolizing a market worth an estimated $14 billion in 2026, which underpins an industry accounting for more than 80 percent of global trade. In May 2026, the Department of Justice indicted four of these Chinese titans for fixing prices and inflating container costs by about 100 percent between 2019 and 2021. Rare Earth Market Stimulation Strategies Should Translate to Other Supply Chains Washington should harness the tools, strategies, and experience developed to protect rare earth element supply chains to better prepare for and mitigate vulnerabilities in other industries. The United States should establish a central, codified pathway to coordinate its tools, enabling rapid adaption to new supply chain threats and clear oversight of investments. That pathway should include a learning agenda: a systematic effort to track which tools and interventions have actually worked across critical minerals programs so future investments in other critical supply chains build on evidence rather than repeat past errors. Congress could play a role in mandating interagency cohesion by creating a formal framework to unite the disparate tools of U.S. economic statecraft. Angela Howard is a research analyst and Daniel Swift is a senior research analyst, both for economics, finance, and trade for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). For more analysis from the authors and FDD, please subscribe HERE. Follow Angela on X @angela__howard. Follow FDD on X @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.