China\u2019s tightening grip over the minerals that power advanced technologies has moved from long-term strategic concern to immediate economic threat\u2014and the U.S. is woefully unprepared, Wharton\u2019s Jeremy Siegel warned.<\/p>\n
\u201cIt\u2019s scandalous that we don\u2019t have a rare earth strategic reserve,\u201d Siegel told<\/a> CNBC\u2019s Squawk Box Monday, calling it a major security failure. \u201cWe let China monopolize 90% of refining rare earth materials. Where were we, realizing the importance of these?\u201d<\/p>\n Siegel urged the U.S. to build a rare earth stockpile similar to the Strategic Petroleum Reserve, which was created in 1975 after the Arab oil embargo left the country exposed to geopolitical blackmail.<\/p>\n His warning comes just days after Beijing unveiled sweeping new export controls that would require companies worldwide to seek Chinese approval before shipping thousands of products containing even trace amounts of rare earths. The move sent shockwaves through U.S. manufacturing and defense supply chains, which rely heavily on Chinese mineral processing.<\/p>\n But Treasury Secretary Scott Bessent said Monday that President Donald Trump will still meet China\u2019s Xi Jinping later this month and is ready to respond \u201cwith whatever it takes\u201d to counter China\u2019s export restrictions.<\/p>\n Bessent, speaking in a Fox Business interview<\/a>, said there had been \u201csubstantial communication\u201d between U.S. and Chinese officials over the weekend and confirmed the much-watched Trump\u2013Xi bilateral remains scheduled during the Asia-Pacific Economic Cooperation (APEC) summit in South Korea, sometime in late October.<\/p>\n The meeting had been thrown into doubt after China abruptly moved<\/a> to tighten exports of rare earth elements: critical minerals<\/a> used in advanced weapons systems, electric vehicles, wind turbines, smartphones, and semiconductor manufacturing.<\/p>\n \u201cThis is China versus the world,\u201d Bessent said, warning Beijing had \u201cpointed a bazooka at the supply chains and industrial base of the entire free world.\u201d\u00a0<\/p>\n Rare earths as leverage<\/p>\n Getting repetitive<\/p>\n While the U.S. once led the industry, refining shifted<\/a> to China in the 1980s and 1990s due to lower costs and looser environmental regulation.<\/p>\n But the U.S. is also scrambling to reduce its long-term reliance on Beijing. The Pentagon has funded new<\/a> rare-earth processing facilities in Texas and California, while the Department of Energy has backed partnerships with alternative suppliers such as Lynas Rare Earths<\/a> in Australia.<\/p>\n Beijing has repeatedly signaled willingness to weaponize its mineral dominance during geopolitical disputes. In 2010, it briefly halted<\/a> rare-earth exports to Japan over a territorial disagreement in the East China Sea<\/a>. More recently, during the U.S.\u2013China trade war in 2019, Chinese state media hinted rare earths could be used as \u201cChina\u2019s counterweapon.\u201d<\/p>\n The announcement last week enraged U.S. officials. Trump initially threatened <\/a>to cancel his meeting with Xi and unveiled plans for an additional 100% tariff on Chinese goods beginning Nov. 1. The White House has framed the move as retaliation for what it calls Chinese \u201ceconomic coercion.\u201d<\/p>\n \u201cWhatever it takes\u201d<\/p>\n Bessent said Monday the U.S. would respond forcefully if China maintains its restrictions.<\/p>\n \u00a0\u201cWe have plenty of straight brute-force countermeasures we can pull,\u201d he warned.\u00a0<\/p>\n He cited leverage over semiconductor software exports, access to U.S. financial markets, aircraft components from companies like GE and Honeywell, and even the presence of more than 300,000 Chinese students studying at American universities.<\/p>\n