Anduril Founder Urges Rapid Reindustrialization As U.S. Defense Supply Chain Remains Alarmingly Reliant On China

China’s latest decision to expand rare earth export controls, adding holmium, erbium, thulium, europium, and ytterbium to the restricted list just days ago, serves as yet another wake-up call for the Trump administration and Washignton as a whole. The U.S. remains dangerously dependent on China, the world’s largest producer of rare earths, for these critical minerals that are essential inputs into the manufacturing of drones, humanoid robots, EVs, and advanced weaponry. 

Anduril Industries founder Palmer Luckey sat down with Bloomberg on Friday to discuss how America’s defense supply chains are dangerously reliant on China. He said the U.S. must urgently “reindustrialize” and rebuild its capacity to produce rare earths, semiconductors, and advanced computing hardware domestically if it wants to survive the 2030s. 

“I mean, the reality is that our interests are relatively divergent at this point,” Luckey said, referencing President Trump’s late tariff threats (read here) against Being. “We need to make our own chips, our own computers, our own products downstream. China has a lot of leverage right now, and that makes it very hard to negotiate. They do have a lot of leverage right now, and so it’s very hard to make deals with them. I think it’s actually healthy for the US-China relationship for it not to be so dependent on China right now.”

Luckey noted that Anduril, one of the fastest-growing defense technology startups in the U.S, has been heavily sanctioned by China, forcing it to eliminate all supply chain exposure in China. 

“Remember that we are sanctioned by China. Remember that our executives are personally sanctioned by China. And so we have we can’t we’re not doing this for you to leverage or negotiating reasons. We have to get off of the Chinese supply chain and not just things that are literally made in China, but even things that are dependent on China,” he said. 

Given that China holds considerable leverage in the ongoing trade war, there’s an ongoing risk that Beijing could abruptly sanction a major U.S. defense contractor, triggering supply chain disruptions for critical weapons, such as advanced, man-portable, anti-tank guided missile systems. Such an event could prove devastating for America’s global military posturing and its active operations around the world that depend on these defense systems.

“It’s the broader economy and maybe some other defense companies, if you can believe it, there’s lots of us defense companies that haven’t been sanctioned by China and therefore they haven’t had the foresight to go and build it,” Luckey said. 

However, there is some good news: The Trump administration recently created another mining juggernaut, this time with mining projects in Alaska run by Trilogy Metals, and followed its new stake in Lithium Americas Corp., which is developing the Thacker Pass lithium project in Nevada. In July, the U.S. Defense Department agreed to a $400 million equity investment in MP Materials Corp. to fund a plant for rare-earth magnets. It is expected to do the same with USA Resources. 

There’s certainly a race against time to secure supply chains before 2030.