Rare earth quake

Summary

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Unhedged Podcast Summary

Episode Title: Rare earth quake
Date: October 16, 2025
Hosts: Katie Martin, Rob Armstrong, Hakyung Kim
Produced by: Financial Times & Pushkin Industries

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Episode Overview

In this episode, the Unhedged team dives into the world of rare earth elements, unpacking their geopolitical importance after China announces export controls. The conversation covers what rare earths are, why China dominates their processing, and the ripple effects on global markets and trade wars, especially in the context of former President Trump's tariffs. The hosts use their signature wit to make sense of these complex topics for listeners who want to "blag" their way through a rare earths-related conversation.

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Key Discussion Points & Insights

1. Rare Earths: Quiz & Introduction

(01:18 – 03:02)

• Segment: Hosts open with a playful quiz where Katie tries to stump Rob and Hakyung with real and made-up rare earth element names.
  • Notable quiz items: Prasiodemium, Terbium, Lutetium – highlighting both real and invented names.
• Key Point: Many rare earths are central to modern technologies like magnets, cancer treatments, petroleum refining, optics, EVs, and electronics.

Quote (Katie Martin, 03:04):
“All of these things are like, you know, super, super important in a super wide range of different electronics and all the rest of it.”

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2. China’s Export Controls – What’s Happening?

(04:25 – 06:06)

• Explanation:
  • China announced export controls on rare earths, shaking markets and prompting political responses, notably from Donald Trump.
  • Despite their name, rare earth elements aren't actually rare but are dirty and costly to mine and process.
  • The West’s strict environmental regulations led to outsourcing production to China, which prioritized low-cost, high-volume output and looser regulations.

Quote (Hakyung Kim, 04:39):
“They’re not very rare at all. You can pretty much just drill a hole anywhere in the world and get these rare earths. But the thing is, China has this incredible advantage…in mining…[and] processing them.”

Quote (Katie Martin, 05:23):
“They’re filthy dirty. To get out the ground and to process. Right. This is a very mucky business.”

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3. The Market Reaction & Trump’s Trade Tactics

(06:06 – 08:30)

• Market Impact:
  • China’s saber-rattling led to volatile, swift market reactions.
  • Trump responded with threats of steep tariffs (“100% tariffs”), which the market took seriously, causing the administration to quickly backpedal.

Quote (Rob Armstrong, 07:22):
“It was very violent. It responded very specifically to Trump’s truth social post saying, I’m going to put 100% on…[the administration] had to walk back its comments.”

• Big Ideas:
  • The situation shows Trump isn’t done with tariffs; trade policies can shift erratically.
  • Assumption that China lacks economic leverage is a mistake—they “have plenty of cards.”

Quote (Katie Martin, 08:30):
“Trump is not done with his tariffs…he can just jack these things up and down whenever he wants…And we should never fall into the trap of assuming that China has no cards here. They have plenty…and this is a really big one.”

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4. Elasticity of Supply: Can China’s Leverage Last?

(09:13 – 12:44)

• Discussion:
  • If rare earths are abundant, why is China such a critical supplier?
    • While the elements are widespread, opening new mining/processing is slow (decades in the US, per Hakyung).
    • China's dominance is due to scale, cost, and technological/process know-how that it guards closely.
  • The West is aware and investing in alternative sources (Canada, US, Australia), but supply expansion is slow and constrained by regulations.

Quote (Rob Armstrong, 09:13):
“One of Armstrong’s basic beliefs about economics is never underestimate the elasticity of supply. If you make something scarce…new supply turns up. And that seems to be happening.”

Quote (Hakyung Kim, 12:10):
“In the U.S. as it stands right now, it takes around nearly three decades to get approval for somewhere to mine.”

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5. Wider Economic and Policy Trade-Offs

(11:05 – 13:07)

• Choices for the West:
  • Continue dealing with China ("art of the deal") vs. relaxing regulations to enable domestic mining, with serious environmental risks.
  • Nationalism (self-sufficiency) vs. global production distribution.

Quote (Rob Armstrong, 11:22):
“We lived in a world where there was a sort of distribution of production…But under nationalism, everybody’s got to make everything, or at least everybody’s got to make all the really important stuff for themselves.”

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6. Outlook: Will the Standoff Continue?

(13:07 – 14:22)

• Prediction:
  • Rob argues Trump’s pattern is to escalate but ultimately compromise before truly deep pain hits.
  • China similarly has little interest in a full-blown trade war.

Quote (Rob Armstrong, 13:07):
“Trump is not strongly committed to much of anything and if you put pressure on him, he will come to an accommodation. And that’s the process we’ve seen.”

Quote (Hakyung Kim, 14:05):
“China has a very big card with this, but…they don’t want 100% tariffs on their goods either. So I think both sides are very aware of this fact.”

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Notable Quotes & Memorable Moments

• “None of us know what any of these funny rocks are.” – Katie Martin (04:25)
• “It’s just a pain in the house to get.” – Rob Armstrong on rare earths (10:50)
• “Don’t head out into your garden and try and find lutetium. But if you do, let us know.” – Katie Martin (14:33)

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Timestamps of Key Segments

• 01:18 – Rare earth quiz (Prasiodemium, Terbium, Lutetium)
• 04:25 – Explanation of China’s rare earth dominance
• 06:06 – Trade negotiation posturing and market reaction
• 09:13 – Elasticity of supply and challenge of shifting away from China
• 11:05 – The trade-off: self-sufficiency vs. environment
• 13:07 – Predictions regarding Trump, China, and ongoing standoff
• 14:52 – Long/Short segment (off-topic, ends main discussion)

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Tone & Style

• Casual, witty, and irreverent banter (“Don’t head out into your garden and try and find lutetium.”)
• Clear explanations for non-experts
• Frequent playful jabs at both Trump’s unpredictability and market overreactions
• Cohesive group with strong chemistry and a knack for demystifying finance buzzwords

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Conclusion

This episode provides an accessible, insightful exploration of rare earths’ real importance and their role in the ongoing US-China economic rivalry. With colorful analogies, a fun chemistry quiz, and pragmatic economic takes, Unhedged helps listeners understand why obscure elements suddenly dominate headlines—and what it means for markets and policy.

Transcript

[A]

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[B]

Today you can join me, Katie Martin, with Chris Giles and Claire Jones, my colleagues from the ft, but also with former Fed Vice chair Lyle Brainard and Fidelity International's Salman Ahmed on October 23 for a subscriber event. All the details for you to register and ask questions in advance are available on FT.com/edge Pushkin, Rob Armstrong, First Sea Lord of the Unhedged newsletter and Hakyung Kim, Rob's glamorous and able assistant. Are you ready to play a game?

[C]

Sure.

[D]

Heck yeah. What game is this?

[B]

Rare earth I just learned about on the Internet or word I just made up?

[C]

Let's do this.

[D]

I love this. Let's begin.

[B]

Okay, number one. Prasiodemium. Rare earth or thing I just made up.

[D]

Say that for us one more time.

[B]

Prasiodemium.

[D]

See, I know that's not rare earth because it's a character in the second Lord of the Rings movie. So I'm going to say that's not a rare earth. Hakyung, what's your view on prasyademium?

[C]

I'm also going to say not a rare earth.

[D]

Well, how'd we do?

[B]

Katie, you're both wrong. It is a rare earth and it's used in strong magnets.

[D]

Katie.

[B]

Pleum.

[C]

That has to be fake.

[D]

Yeah, golly. It has the word golly in it. Katie, you can't trick us with that.

[B]

Okay, you're both right. I made that up. Terbium.

[C]

I think that sounds legitimate.

[D]

Yeah, terbium sounds real.

[C]

It sounds like a scientist.

[D]

Yeah, yeah, yeah.

[B]

Okay, you're both right. This is a rare earth.

[D]

So we're two. We went two out of three. You know, we're like basic. We're basically metallurgists Hak Young and I.

[B]

Used in lighting and display screens. So there you are. Okay, last one.

[C]

You ready?

[B]

Lutetium.

[D]

Not real.

[C]

I'm go the other way.

[D]

You're going to go. Oh. So this determines who the winner is. Lutetium. Real or made up.

[B]

So Ha Kyung Sang real.

[D]

Yes, she is.

[B]

Hakyung is correct. It's one of my personal favorites. It's used in cancer treatment, petroleum refining and electronics, and high performance optics. This is A very versatile science thing.

[C]

What's it called again?

[B]

Lutetium. I'll be taking notifications about rare earths. I don't know anything else about them, but all of these things are like, you know, super, super important in a super wide range of different electronics and. And all the rest of it. Anyway, the other day China said it would impose export controls on these magic elements. And Yemen. Donald Trump did not respond well. Stock markets, as a result, also did not respond well. Yes, we're doing this whole thing again. So today on the show, we're going to tell you just enough about rare earths to blag your way through a conversation about them and ask if this is the new front in Trump's trade war. This is Unhedged, the markets and finance podcast and the Financial Times and Pushkin. I'm Katie Martin, a markets columnist at the FT in London, and I'm joined down the line from New York City by the dynamic duo from the Unhedged newsletter. Rob Armstrong, refreshed from a short break, and his trusty sidekick and podcast newbie, Hakyung Kim. Hakyung, welcome to the show.

[C]

Thank you so much, Katie.

[D]

This is exciting. It's like I went away on for a few days of break. Hakyung did all the work on the newsletter and now she's going to do all the work on the podcast. It's all working out exactly according to plan.

[B]

Okay, so Hakyung rare earths, big in the news at the moment. None of us know what any of these funny rocks are. So tell us, like, what's going on here and what these things do.

[C]

Yeah. So I have taken a crash course basically in the past few days on these rare earths that it turns out are not very rare at all. You can pretty much just drill a hole anywhere in the world and get these rare earths. But the thing is, China has this incredible advantage in not only mining these rare earths, but also processing them. Because basically, as the west produces bolstered up their environmental regulations, China took a more relaxed approach, say, and they really went in on processing.

[D]

That's a very diplomatic way of saying it. Hakyung, a relaxed approach to environmental regulation.

[C]

Yeah, basically a higher tolerance for the pollution involved in processing these rare earths.

[B]

Because they're filthy dirty. To get out the ground and to process. Right. This is a very mucky business.

[C]

Exactly. It's not pretty at all. And basically the west was pretty happy for a while just to let China do all the dirty work and just accept the cheap rare earths exports and they're critical for defense, semiconductor companies, chips, EVs, all that. EVs. Yeah. So all the big important stuff.

[B]

And China knows that it's prepared to dig this stuff out the ground that no one else is prepared to do. And it's prepared to process it. And it has stockpiled this stuff. And then end of last week, it said, right, we're going to use this as a very big bargaining chip.

[D]

I have two questions for the group about this. Question number one is, do we think this is all a case of let's take out the sabers and give them a good rattle? In other words, we have this trade negotiation session coming up. When is that? Hakyung.

[C]

So it's a meeting at the APEC forum. Do you call it that?

[D]

Yeah, I think it's a forum.

[C]

Yeah. Later this month in Korea.

[D]

Right. And maybe we can write this off as standard posturing ahead of a big negotiation. Katie, are you a buyer there? Hak Young, what do you think? Did the market overreact, perhaps would be another way to put the question, did the market overreact?

[B]

So there were, you know, markets have been going up and up and up and up forever. And there was a pullback on Friday. We're talking like one and a half, 2% or something. It's not like it, it's not like it crashed. But then fast forward to Monday. So China said we might impose these, these export controls. Trump flipped out, as he so often does, and said, right, well, I'm going to slap extra trade tariffs on China. But then by the time the weekend had ended, this had all just, like, gone away. Because as someone close to this show has observed previously, Trump always chickens out. The taco trade is still on.

[D]

It is true. But I would slightly, I think you're underplaying the market's reaction a little bit. It was very violent. It responded very specifically to Trump's truth social post saying, I'm going to put 100% on. And it was enough of a move that the administration had to walk back its comments. I don't even, I still don't know what a truth social post is called. A truth, I think, anyway, I don't know. So he had a truth that said, we're trying to help China, not hurt it. So, like it was, it was a violent enough reaction that the president did a classic taco and said, you know, everyone calm down. We're going to be able to work this out.

[C]

I think I, I agree with Katie. Yeah, it's, I think it would have been Weirder now for the market to just completely brush it off. Because even if you chalk it up as posturing, these are still really wide ranging curbs that affect pretty much every major US industry. To brush it off, that would have been even more concerning and maybe we wouldn't be where we're at now if we didn't have that sell off.

[B]

This whole thing tells us two really important things. The first one is like Trump is not done with his tariffs, so we think that we've reached a sort of relatively happy place where we kind of know what the outline of the tariffs is and everyone knows where they are, but he can just jack these things up and down whenever he wants to based on whoever insulted him last. The other thing is we should never fall into the trap of assuming that China has no cards here. They have plenty of cards they can play and this is a really big one. Like the US does legitimately need these rare earths. So again, you've got two pretty, you know, they can square off against each other and cause real consequences.

[D]

Agree on both points. What I don't understand. And hakyung, maybe you learned something about this in your recent research. And this was the second question I wanted to ask. If this stuff is in fact not rare and there is a lot of it sitting around in the dirt all over the world, how long can China play this card? Because if you just for example, type rare earths into the FT search function, you will get like eight articles in the last six months about investment in rare earths, mining and processing capacity in Canada, in the United States, in Australia. So the world has gotten the memo that China has a firm hold on them in this very specific, very important area and is responding. One of Armstrong's basic beliefs about economics is never underestimate the elasticity of supply. If you make something scarce and you make it expensive and people want it, new supply turns up and that seems to be happening. So how long can China play this card? Hakyung.

[C]

Well, so the thing is actually quite cheap currently supply. So one of the things that Scott Besant, the Treasury Secretary floated is that he's going to put a price floor on rare earths to help the domestic US rare earths industry. Very classic capitalist free market move.

[B]

But yes, but that's fascinating.

[D]

I had no idea about that, that this stuff is cheap. It's just a pain in the house to get.

[C]

China's just producing so much that they're just doing it at such a cheap cost.

[D]

Right, but we've gotta have it. Yes, it's cheap, but we've gotta have it.

[C]

So I guess like the trade off is, are you willing to just engage in the art of a deal, or do you think that is worse than just mining through the ground on your country and kind of somewhat destroying the environment in the process?

[D]

Yeah.

[C]

Which is more appealing to you?

[D]

Yeah. It kind of personifies in an interesting and important way the trade offs that Trump's economic policies force us into. We lived in a world where there was a sort of distribution of production, labor distribution, I guess you just call it distribution of production where, you know, we traded this for that or whatever. But under nationalism, everybody's got to make everything, or at least everybody's got to make all the really important stuff for themselves. Right. And, and this is the kind of issue this, this really brings to a head. But hacking. You didn't quite answer my question. If I want to start Armstrong's rare Earths mine in my backyard in Brooklyn, what am I looking at, a year, 10 years? You know, if I want to get into the biz.

[C]

Yeah. I mean, as our energy colleague Jamie Smith pointed out, in the U.S. as it stands right now, it takes around nearly three decades to get approval for somewhere to mine. So that's a pretty lengthy process.

[D]

Yes.

[C]

Say you can scrap all those environmental regulations put in place and just start kind of mining immediately. It's the big point right now where China has the control, is the processing. And the government also put restrictions on basically Chinese nationals being able to kind of export this technology and the know how they have to foreign companies.

[B]

So what we're saying. What we're saying is Mrs. Armstrong can rest easy. Rob's not going to be trying to dig any lutetium out of his back garden when he gets home. That's a reassuring sign. But what do we all think? Is this likely to keep rumbling on? Do you think China's gonna keep playing hardball here? I don't see why it wouldn't.

[D]

My view, I'm just gonna stick with the view I've stuck with so far in this presidency, which is that Trump is not strongly committed to much of anything and that if you put pressure on him, he will come to an accommodation. And that's the process we've seen with his trade policy so far. He ended at a point where he imposed tariffs that were enough for the rest of the world to pay while business going on generally as usual. And he didn't push it, except in a few very specific cases. Any further than that, and I think that's where we're going to get in this case too, that Trump is not willing to deal with the serious economic and political pain involved in a proper tariff war with China. And China, by the way, seems to be making the same bet that I'm making.

[C]

Yeah, I think I'm in agreement with you, Rob. China has a very big card with this, but it's not like they want 100% tariffs on their goods either. So I think both sides are very aware of this fact. I mean, I can't remember much game theory, but there must be something in game theory that will explain.

[D]

We started this podcast with Metallurgy and now we're we're ending on Game Theory.

[B]

Yes, yes. It's a beautiful combination.

[D]

Very intellectual group of people we have here.

[B]

That's. That's it. Listeners, please do not head out into your garden and try and find lutetium. But if you do, let us [e-mail] we are going to be back in just one second with longshore.

[A]

Bonds are back and so Is all the Credit PGYM Fixed Income's monthly podcast series. From the latest trends to long term perspectives, you'll get timely fixed income insights from leading economists, research analysts and investment professionals. Whether you're new to bonds or a seasoned investor, tune in to all the credit wherever you get your podcasts. This podcast is intended solely for professional investor use. Past performance is not a guarantee of future results.

[B]

Okey doke. It's time for Long Short. That part of the show where we go long a thing we love or short a thing we hate. Hakyung. Have you done your homework? Have you got a long or short?

[C]

I'm going to go long on running. One because of personal reasons I can finally run after months of knee issues. And two, Strava is thinking of doing an ipo.

[D]

What is Strava?

[C]

It's like a running app where you log your runs but then it has a social media aspect to it so you see your friends, your enemies.

[D]

I don't want other people to know anything about my running habits. They are my secret shame.

[B]

But like pretty much everyone who runs is on Strava. Hak Kyung, I'm very happy for your knee. I've had knee issues in the past and they are a real pain.

[D]

Katie, you have a long or a short?

[B]

Well I am short protein. I wish everyone would shut up about protein. Everyone is going on about protein all the time and making it their entire personality. I just think eat an egg. Shut up about it.

[D]

Get on with it.

[B]

Stop putting protein in coffee Go running me crazy.

[D]

Stop talking about protein.

[C]

Actually, there was an article the other day that said there's been led in a lot of major protein powders. So that's a good short, Katie.

[B]

They're going on about it. It's the lead.

[D]

There you go.

[C]

Your instincts were right.

[D]

I'm going to surprise you, Katie, and I'm going to go long esg. Environmental, social and governance.

[B]

You've been on the LED as well. This is a big turnaround from you.

[D]

No, I mean, as you know, I hate ESG and all of its works. And I thought with the change in the political environment that it was going to wither away and die. But then there was a huge announcement by JP Morgan of like a multi trillion dollar initiative to invest in tons of things that would make America strong again. And I realized that ESG is just a bad idea that won't die. It will just change its political affiliation every four years and we'll have to put up with this nonsense forever. So all you can do if you can't beat him, join them. I'm long esg. It'll never die.

[B]

Rob is long ethical investment. Folks, you heard it here. This really is a turnaround. Listeners, we will be back in your ears on Tuesday. So listen up then. Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. Topher Forhees is the FT acting co head of Audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30 day free trial is available to everyone else. Just go to ft.com unhedgedoffer I'm Katie Martin. Thanks for listening.

[C]

Sam.