The United States finds itself under intense pressure as Chinese President Xi Jinping holds the strategic “card” of rare earths: yttrium and scandium, both critical for aerospace and semiconductors.
Shortages threaten the production of engines, advanced 5G chips, and aircraft, just weeks before the Trump – Xi meeting in Beijing, leaving Washington exposed and with limited room for maneuver.
Suppliers to American aerospace and semiconductor companies are facing a growing shortage of critical rare earth elements, even after a temporary easing of trade tensions between Washington and Beijing.
This pressure is emerging only weeks before the scheduled meeting between President Donald Trump and Chinese President Xi Jinping in Beijing for a critical summit, Reuters notes.
The bottleneck is centered on specialized elements such as yttrium and scandium, two of the 17 rare earth elements vital for advanced industries and defense technologies.
Despite their limited volumes, these materials are essential for aircraft engines, high performance alloys, and the production of advanced semiconductors. China dominates their global production.
Although Beijing has resumed several rare earth exports since April, shipments of yttrium and scandium to the United States remain sharply reduced.
Chinese customs data show a dramatic decline in exports to the United States following the introduction of export controls.
Yttrium: Critical for aerospace
Yttrium is used in special coatings that protect aircraft engines and industrial turbines from overheating. Without regular use of these coatings, engines cannot operate safely.
Since the first shortages were reported at the end of last year, its price has risen by approximately 60%, reaching nearly 70 times the levels seen a year ago.
Coating manufacturers are beginning to restrict supplies, according to executives and traders familiar with the market.
Two North American companies that use yttrium for high temperature coatings have temporarily suspended production due to supply constraints.
One of them is prioritizing large customers such as engine manufacturers, while refusing smaller and foreign clients.
Another company has completely halted sales of yttrium oxide based products due to material depletion.
Although aircraft engine production has not yet been disrupted, suppliers describe the situation as precarious, while demand for spare parts and new aircraft from companies such as Boeing and Airbus continues to rise.
Scandium: Risk for 5G and advanced semiconductors
In the semiconductor sector, the shortage of scandium is raising concerns about potential disruptions in 5G chip production.
Global production is measured in only a few dozen tons annually, while the element is used in fuel cells, specialized aluminum alloys for aerospace, and advanced chip manufacturing processes.
Analysts estimate that major American chipmakers rely on scandium for components used in nearly every smartphone and 5G base station.
Delays in Chinese export licenses have slowed deliveries in recent months, while some companies have sought assistance from Washington to navigate the licensing system.
Although certain American companies have sourced scandium through third countries, Chinese authorities require disclosure of the final end user, a requirement that some United States officials believe directly targets the semiconductor sector.
Notably, the United States has no domestic scandium production and there are no fully operational alternative sources outside China. Industry estimates suggest existing stockpiles will last months, not years.
Trade talks and strategic advantage
Rare earth shortages are expected to dominate discussions at the scheduled Trump – Xi meeting in Beijing in March.
The temporary agreement reached in October provided for the easing of Chinese restrictions, but American officials state that access and compliance remain unstable.
The White House has pledged to secure reliable access to critical metals through negotiations with China, while simultaneously developing alternative supply chains.
For Beijing, control of rare earths represents a powerful strategic advantage in broader geopolitical and economic disputes.
For Washington, the shortages highlight vulnerabilities in sectors critical to national security and technological competitiveness.
China’s near monopoly
The current bottleneck illustrates how even limited export controls on specialized metals can impact high value industries. Yttrium and scandium, although small in volume, can halt production lines worth billions of dollars.
China’s near monopolistic position in these materials grants it leverage far exceeding the size of the market. Even when exports are not fully blocked, licensing delays and uncertainty can trigger price spikes, supply restrictions, and strategic concern among American manufacturers.
As aerospace and semiconductor companies struggle to secure supplies, the episode serves as a reminder to policymakers that dependence on critical metals is not merely a trade issue, but a matter of national security.
Whether the upcoming summit delivers meaningful relief or intensifies competition for strategic resources will shape the future trajectory of United States – China economic relations.
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