China didn't need to win a trade war. It could simply turn off the spigot.
In a quiet office near the White House, a team of former Wall Street professionals is attempting to correct one of America's most consequential strategic oversights: decades of dependence on China for the rare earth elements that underpin both modern warfare and everyday life. When Beijing demonstrated last year that it could halt those supplies and force a U.S. policy retreat, Washington crossed a threshold — the Pentagon began deploying not just weapons, but financial instruments, as tools of national security. What is unfolding is a rare and deliberate act of industrial statecraft, one that will test whether a nation can rebuild strategic sovereignty through creative finance rather than waiting for markets to find their own way.
- China's decision to cut off rare earth exports during the trade war exposed a vulnerability so acute it forced the United States to stand down — a humiliation that could not be quietly absorbed.
- The materials at stake are not abstractions: they are inside the guidance systems of missiles, the motors of electric vehicles, and the electronics of fighter jets, making their absence a direct threat to both defense readiness and industrial capacity.
- Deal Team Six — Pentagon-backed and Wall Street-staffed — is deploying billions through equity stakes, price guarantees, purchase commitments, and bridging loans to make alternative supply chains financially viable where market forces alone have failed.
- The race is not simply to find rare earth deposits, which exist in abundance outside China, but to reconstruct an entire extraction, processing, and refining ecosystem that China built over decades.
- The outcome will determine whether the United States can genuinely reclaim leverage over its own military and industrial future, or whether China's grip on these critical materials only deepens as global demand accelerates.
A short walk from the White House, a team of former Wall Street traders is pursuing one of the decade's most consequential industrial missions. They call themselves Deal Team Six — a wry nod to the Navy's elite unit — and their goal is to build an American supply of rare earth elements independent of China.
Rare earths rarely make headlines, but they are embedded in nearly everything that matters: missile guidance systems, fighter jet electronics, electric vehicle motors, and household appliances. For decades, the U.S. allowed China to dominate their extraction and processing. That miscalculation became undeniable last year when, amid an escalating trade confrontation, Beijing cut off supplies. The move was swift enough to force a U.S. retreat — a demonstration that China could win not through tariffs or negotiation, but simply by turning off a spigot.
The humiliation triggered a fundamental shift. The Pentagon, traditionally focused on procurement rather than supply chains, entered the business of creative finance. Deal Team Six assembled a toolkit drawn from venture capital and defense contracting alike: equity stakes in mining companies, long-term price guarantees, purchase commitments, and bridging loans — instruments designed to make the economics of rare earth independence viable where market forces had not.
What distinguishes this effort from previous attempts is its deliberateness. Rather than waiting for supply chains to naturally diversify, the Pentagon is actively constructing the conditions under which alternative producers can compete. The challenge is not finding ore — deposits exist across the world — but rebuilding the entire ecosystem of extraction, processing, and refining that China developed over decades.
If Deal Team Six succeeds, it could fundamentally reduce the geopolitical leverage Beijing holds over American military and industrial capability. If it falls short, the vulnerability that forced last year's retreat will persist — and likely deepen — as global demand for these materials continues to grow.
A short walk from the White House, in an office that could belong to any investment firm, a team of former Wall Street traders is working on what may become one of the most consequential industrial projects of the decade. They call themselves Deal Team Six—a half-serious nod to the Navy's elite special operations unit—and their mission is to do something the United States has largely failed to do for years: build an independent supply of rare earth elements that doesn't depend on China.
Rare earths are not glamorous. They don't make headlines. But they are woven into nearly everything that matters to modern defense and daily life. They go into the magnets that spin the motors in microwave ovens and electric vehicles. They are essential to the guidance systems in missiles and the electronics in fighter jets. For decades, the U.S. allowed China to dominate their extraction and processing, a strategic miscalculation that became impossible to ignore when the consequences arrived.
Last year, during President Donald Trump's escalating trade confrontation with Beijing, China did what it had threatened to do before: it cut off supplies. The move was swift and devastating enough that Trump, despite his combative posture on trade, was forced to back down. The message was clear. China didn't need to win a trade war through tariffs or negotiation. It could simply turn off the spigot on materials the American military and economy depended on, and watch the U.S. scramble.
That humiliation has triggered a fundamental shift in how Washington thinks about industrial strategy. The Pentagon, traditionally focused on buying weapons rather than building supply chains, is now in the business of creative finance. Deal Team Six is assembling a toolkit that reads like a venture capital fund crossed with a defense contractor's balance sheet: equity stakes in mining and processing companies, long-term price guarantees that shield producers from market volatility, purchase commitments that promise steady demand, loans that bridge the gap between exploration and production, and other financial instruments designed to make the economics of rare earth independence work.
The scale of the effort is significant. Billions of dollars are being deployed, not as grants or subsidies in the traditional sense, but as strategic investments meant to reshape the global supply chain. The team is racing because time matters. China's advantage isn't just in current production—it's in the infrastructure, expertise, and relationships built over decades. Breaking that monopoly requires not just finding new deposits of rare earth ore, which exist in abundance outside China, but building the entire ecosystem to extract, process, and refine them into usable materials.
What makes Deal Team Six different from previous attempts at supply chain diversification is the sophistication of the financial engineering. Rather than waiting for market forces to naturally shift production away from China, the Pentagon is actively constructing the conditions under which alternative suppliers can compete. This is industrial policy in its most direct form—the state using its financial power to reshape markets in the name of national security.
The stakes extend far beyond rare earths themselves. If Deal Team Six succeeds, it could fundamentally alter the leverage China holds over American military capability and economic resilience. If it fails, the U.S. remains vulnerable to the same pressure that forced Trump's retreat. The team's work over the next few years will likely determine whether the U.S. can genuinely diversify its critical mineral supplies, or whether China's grip tightens further as the world's demand for these materials only grows.
Notable Quotes
China could simply turn off the spigot on materials the American military and economy depended on, and watch the U.S. scramble.— Reporting on China's supply cutoff during Trump's trade war
The Hearth Conversation Another angle on the story
Why does the Pentagon care about rare earths? That sounds like an economics problem, not a defense problem.
It became a defense problem the moment China weaponized it. When Trump was forced to back down last year, it wasn't because of tariffs or negotiation. It was because China simply stopped selling. That's leverage. The Pentagon realized that if China can cut off supplies during a trade dispute, they can do it during an actual conflict.
But rare earths exist outside China, right? Why hasn't the U.S. just mined them domestically?
They do exist, and the U.S. has deposits. But extraction and processing are expensive and environmentally intensive. China built its dominance by doing it cheaper, and by controlling the entire supply chain—mining, refining, processing into usable materials. You can't just flip a switch and rebuild that overnight.
So Deal Team Six is essentially paying companies to do something that isn't profitable on its own.
Exactly. They're using equity stakes, price guarantees, purchase commitments—financial tools that make the economics work. It's venture capital meets national security. The Pentagon is saying: we'll help you build this, because we need it to exist.
How long does this take?
That's the race. China's advantage isn't just current production. It's decades of infrastructure and expertise. Deal Team Six is trying to compress years of market development into months. Every delay means the U.S. stays vulnerable.
And if they fail?
Then the U.S. remains dependent on China for materials it can't live without. The leverage China demonstrated last year becomes permanent.