EDITORIAL: China rare-earth move highlights American vulnerabilities

Stocks plunged nearly 900 points on Friday after China opted to break out a flamethrower in its ongoing trade dispute with the United States. President Donald Trump had little choice but to respond.

Chinese officials announced last week that, starting in December, foreign interests must obtain a license to export any product containing more than 0.1 percent of rare earth minerals “that are either sourced in China or manufactured using the country’s extraction process,” Reuters reported. The Wall Street Journal called it “a nearly unprecedented export control.”

The move will disrupt the world market for semiconductor chips, which power the global economy. China controls a large percentage — estimates range from 70 percent to 90 percent — of the rare earth substances necessary to sustain and produce a wide variety of industries and goods, including tech offerings, energy products, automobiles and defense industry production.

Mr. Trump took to his social media platform Truth Social to lambaste China and its president, Xi Jinping. “It is impossible to believe that China would have taken such an action, but they have, and the rest is History,” he posted, adding the licensing scheme is “absolutely unheard of in International Trade, and a moral disgrace in dealing with other Nations.”

The president later announced that the United States would place export controls on critical software sent to China and jack up tariffs to 100 percent on the nation beginning Nov. 1. He also said he may postpone a scheduled summit this month with the Chinese leader in South Korea.

The latter would be unwise. The meeting provides an opportunity for the nations to cool tensions and reach an agreement to mitigate the damage wrought by an intensified trade conflict between the world’s two largest economies. Some analysts believe China’s move was an effort to gain leverage in the talks.

Regardless, the development represents a warning siren regarding our reliance on hostile foes for these crucial materials. While there is little the United States can do in the short term, the nation must intensify efforts to develop domestic sources of rare earths. Econofact reports that this country “was the main global source of rare earths until the mid-1980s, but a combination of high environmental costs in the U.S. with competition from lower-cost production shifted the industry to China.”

The United States has made strides in recent years toward ramping up production, but challenges remain, particularly regarding environmental regulation that discourages processing and refining. Until the country eliminates those barriers and makes it easier for private interests to tap this nation’s wealth of resources, we will remain vulnerable to the type of aggression that China unveiled last week.