The Washington Post reports:

Senior administration officials are scrambling to stem economic damage from China’s restrictions on rare-earth exports, as President Donald Trump’s trade war risks cutting key industries and defense contractors off from supplies of metals crucial to production, according to three people familiar with internal deliberations.

While companies search for alternative suppliers and urge the White House to cut a deal that will keep the materials flowing to U.S. manufacturers, the Trump administration is finding there are no easy solutions. China has a lock on the supply of certain elements that are essential to making such things as military drones, consumer electronics and battery-powered vehicles.

“China knows this is a very strong bargaining chip, and it is why they are playing it,” said Ashley Zumwalt-Forbes, who was a deputy director for batteries and critical materials at the Energy Department during the Biden administration. “This is fast emerging as our Achilles’ heel. What makes these bans particularly dangerous is oftentimes one of these materials is a single point of failure for entire supply chains, and its production rests solely in China.”

The restrictions, imposed by Beijing in response to Trump’s steep new tariffs, have provoked deep consternation at high levels of the administration. Aides at the White House National Security Council, National Economic Council, Council of Economic Advisers, Commerce Department, Energy Department and Office of the Trade Representative, among other agencies, have been involved, said the people familiar with the discussions, who spoke on the condition of anonymity to reflect internal matters.

Beijing curbed exports to the United States this month of the rare earths, a group of 17 metals critical for industry. Amid deepening concern over potential economic fallout from the trade war, Trump has softened his tone in recent days, saying the U.S. is eager to make a deal and floating substantial reductions in the import duties. [Continue reading…]