Suppliers to U.S. aerospace and semiconductor companies are facing worsening shortages of key rare earth elements, even after a temporary easing of trade tensions between Washington and Beijing. The squeeze comes just weeks before President Donald Trump is expected to meet Chinese President Xi Jinping in Beijing for a high-stakes summit.
The bottleneck centers on niche rare earths such as yttrium and scandium two of the 17 elements critical to advanced manufacturing and defense technologies. Though small in volume, these materials play indispensable roles in jet engines, high-performance alloys and next-generation semiconductors. China dominates global production of both.
While Beijing has resumed many rare earth exports since imposing restrictions in April, shipments of yttrium and scandium to the United States remain sharply reduced. Chinese customs data show a dramatic drop in exports to the U.S. following the introduction of export controls.
Yttrium: A Critical Aerospace Ingredient
Yttrium is used in specialized coatings that prevent jet engines and industrial turbines from melting under extreme heat. Without regular application of these coatings, engines cannot safely operate.
Since shortages were first reported late last year, yttrium prices have surged roughly 60% and now stand nearly 70 times higher than a year ago. Coatings manufacturers are increasingly rationing supplies, according to executives and traders familiar with the market.
Two North American companies that use yttrium to produce high-temperature coatings have temporarily paused production due to supply constraints. One firm has begun prioritizing larger clients including engine makers while turning away smaller and overseas customers. Another company in the supply chain has reportedly stopped selling products containing yttrium oxide altogether after running out of material.
Although jet engine production has not yet been disrupted, aerospace suppliers describe the situation as precarious. Manufacturers are already under strain to meet rising demand for spare parts and new aircraft from planemakers such as Boeing and Airbus.
Scandium: Risk to 5G and Advanced Chips
In the semiconductor sector, scandium shortages are raising alarms about potential disruptions to next-generation 5G chip production. With global output measured in only a few dozen tons per year, scandium is used in fuel cells, specialty aluminum aerospace alloys and advanced chip manufacturing processes.
Industry analysts say major U.S. chipmakers rely on scandium for components that go into nearly every 5G smartphone and base station. Delays in obtaining Chinese export licenses in recent months have slowed deliveries. Some companies have sought help from Washington as they navigate the licensing system.
Although some U.S. firms have sourced scandium through third countries, Chinese authorities require export license applicants to declare end users a move that some U.S. officials believe is aimed directly at the semiconductor sector.
Notably, the United States currently has no domestic production of scandium and lacks fully operational alternative supply sources outside China. Industry estimates suggest stockpiles could last months, not years.
Trade Talks and Strategic Leverage
The rare earth shortages are expected to feature prominently in discussions when Trump and Xi meet in Beijing in March. The October detente between the two sides was partly premised on China easing export restrictions on critical minerals, but U.S. officials say compliance and access remain uneven.
The White House has stated it is committed to securing reliable access to critical minerals through negotiations with China while also developing alternative supply chains.
For Beijing, rare earth dominance provides powerful strategic leverage in broader geopolitical and economic disputes. For Washington, the shortages highlight vulnerabilities in sectors central to national security and technological competitiveness.
Analysis
The current squeeze underscores how even limited export controls on niche minerals can ripple through high-value industries. Yttrium and scandium may represent tiny fractions of overall trade volumes, yet their absence can halt production lines worth billions of dollars.
China’s near-monopoly over these materials gives it influence disproportionate to the size of the market. Even if exports are not fully blocked, delays and licensing uncertainty can generate price spikes, supply rationing and strategic anxiety among U.S. manufacturers.
As aerospace and semiconductor firms scramble to secure supply, the episode reinforces a broader lesson for policymakers: critical mineral dependence is not just a trade issue, but a national security concern. Whether the upcoming summit produces tangible relief or deepens competition over strategic resources could shape the next phase of U.S.–China economic relations.
With information from Reuters.
