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China has recently threatened to ban export of rare earth metal to the US. What can the US do to retaliate against such a move politically? Is there anything the U.S. can do that could hurt China as much? Also, is there any perhaps less aggressive move the U.S. could use in order to retaliate or prevent China from doing such a thing?

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What can the U.S. do politically if China decided to stop exporting rare earth metals to the U.S.?

Sensible actions seem to be:

  • Buy rare earth materials from other suppliers
  • Facilitate the production of rare earth materials in the USA and/or friendlier countries
  • Invest in alternatives to rare earth materials

I left this as a comment on a similar question (but specifically about Nato):

Such materials aren't particularly rare in terms of distribution around the planet - they are 'just' costly (economically and environmentally) to produce. Decades ago the USA had a virtual monopoly on supply. It lost that monopoly to China which could do it much cheaper. If China makes rare earth materials more expensive or stops supply altogether, other countries will find production more economic and/or they will use different materials. As happened during the China rare earth embargo in 2010.

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    "It lost that monopoly to China which could do it much cheaper" - That's only a (small) half of the story. The US primarily lost that monopoly to China because US mining companies didn't want to comply with increasing environmental protection laws and regulations. When the shift occurred, China couldn't care less about the environment impact. – Denis de Bernardy May 22 at 9:07
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    The embargo was only on Japan, and only lasted two months. In the aftermath Japan did reduce its imports of Chinese rare earths, but was still pretty dependent on them "Whereas in 2010 Japan imported 82% of its rare earths directly from China, that figure has dropped to 49% thus far in 2012." – Fizz May 22 at 10:26
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    The US does not even need to do anything politically. The Chinese export ban is equivalent to an artifical price increase to infinity (ignoring smuggling &c). The US businesses that need rare earths (which aren't actually all that rare) will buy at a somewhat higher price from other suppliers, and/or will develop technologies to use less. The higher price will make formerly unprofitable mines profitable, so as with any such act, China will be the ultimate loser. – jamesqf May 22 at 18:01
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    @Denis de Bernardy: It's not that US mining companies didn't WANT to comply with environmental standards, it's that the cost of doing so meant that the Chinese sources were cheaper. If the Chinese make their REE's artifically expensive with an export ban, the US sources are now cheaper even after complying with environmental standards. – jamesqf May 22 at 18:04
  • @jamesqf: nah, they'll just source the rare earth materials from Brazil or some other place. – Denis de Bernardy May 22 at 18:08
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As this question was phrased, what could the US do to hurt China in response, they could do almost anything to escalate the trade war. Of course, there's a measure of self-hurt in trade wars as well.

But the US has already taken (protectionist) steps to reduce its dependence on Chinese raw or finished imports using rare earths, at least in the military sector:

The new legislation, more commonly known as the 2019 National Defense Authorization Act, prohibits the U.S. Department of Defense from acquiring rare earth magnets – along with certain tungsten, tantalum and molybdenum products – from China, Russia, Iran, and North Korea. “This is a turning point in the re-establishment of an independent US rare earth industry,” said Ucore President and CEO Jim McKenzie. “It is also an important inflection point for rare earth investors. Rare earth magnets, or REMs, represent a technology of critical importance to the American military.”

More of the same could follow, whether or not China cuts its exports to the US.

Following the 2009-2010 disruption in Chinese rare earth exports, the USGS has conducted a survey of US rare earths deposits, and found them to be substantial. If cost were no objection, the US could easily exploit these. (And related to that, Japan has even conducted underwater prospecting finding vast reserves in their waters.)

As an aside, China lost a WTO case on their rare-earth export restrictions in 2014-2015 (the complaints were from the US, EU, Japan (DS431-DS433) and Canada also joined consultations.) But short-term, surely there could be price disruption from a Chinese restrictive measure, as there was not so long ago:

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Globally however there has already been a reduction on dependency from China since then:

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