There is a legitimate case for reducing American dependence on Chinese rare-earth minerals and processing. China controls more than 90 percent of the downstream value chain for rare-earth processing and magnet production—a chokehold it demonstrated in 2025 when it imposed a near-total embargo on exports of seven critical elements in retaliation for US tariff policy, disrupting automotive and defense supply chains almost immediately. The International Energy Agency projects that by 2040, global demand for these materials will grow by more than 60 percent. The vulnerability is real. The question is whether the Trump administration’s response is driven by economic and security concerns or by something else.
The Vulcan Elements situation suggests the latter.
Founded by a Harvard Business School student, Vulcan is a three-year-old start-up planning to build what would be the largest rare-earth magnet factory outside China, in Johnston County, North Carolina. In August 2025, 1789 Capital—the venture fund where Donald Trump Jr. is a partner—took an undisclosed stake in Vulcan as part of a $65 million Series A funding round. At the time of the investment, Vulcan was valued at roughly $200 million. Three months later, the federal government committed $670 million to the company, including $50 million from the CHIPS and Science Act plus a $620 million conditional loan from the Pentagon’s Office of Strategic Capital with warrants. By January 2026, investors were reportedly eyeing a valuation of nearly $2 billion, according to recent Bloomberg reporting—a 10-fold increase in five months underwritten by taxpayers for a start-up in which the president’s son holds a stake.
Officials from the White House, Vulcan, and 1789 Capital all denied any impropriety. For its part, the Pentagon stated that “outside affiliations, investors, or political connections play absolutely no role in the Department’s funding decisions.”
Until this week, there was no hard evidence suggesting political interference. Although Democrats on the House Natural Resources Committee moved to subpoena Trump Jr. to testify about the deal, the Republican majority refused. Likewise, a group of Democratic senators has demanded answers from the Pentagon about the Vulcan deal to no avail. Now we are starting to learn more about the events that transpired—and they raise very serious concerns.
Based on interviews and Defense Department records, ProPublica reported today that the push to fund Vulcan came directly from Peter Navarro, President Trump’s senior counselor for trade and manufacturing and a close friend of Trump Jr. Of the many companies competing for Pentagon loans at the time, Vulcan was the only one whose deal was set in motion by a direct request from a senior White House official—an arrangement that defense officials said was without precedent in the office’s review process. Indeed, according to ProPublica, the Pentagon’s Office of Strategic Capital typically spends months vetting companies before committing public funds, but in this instance, Pentagon staff were directed to close the Vulcan deal in a matter of weeks, reportedly working late nights to get it done. “The call came from the White House: We have to get this done,” one defense official told ProPublica.
The office’s new leadership—former Wall Street executives recruited partly through a headhunter whose leaked presentation promised them access to “royal families and foreign sovereign contacts” if they ever wanted to raise their own fund—has been selecting companies through personal networks rather than formal applications. This is the first Pentagon contract directly linked to White House intervention on behalf of a Trump family–connected company, but it may not be the last. ProPublica also reports that Trump Jr. is on the advisory board of and holds millions of dollars worth of shares in a Florida-based drone parts manufacturer, Unusual Machines, which is currently under review for a Pentagon loan of its own.
China’s rare-earth chokehold poses genuine strategic and economic problems—one serious enough to briefly shutter American auto plants and rattle defense procurement officials when Beijing moved to restrict exports in 2025. A supply chain concentrated in the hands of a single foreign country willing to use it as a lever in trade disputes demands a serious and credible policy response. What the Vulcan situation describes is the opposite and implies a larger inherent flaw with industrial policy: A $670 million government commitment, including the largest Pentagon loan of its kind, pushed through in weeks at the direction of a White House official with a personal relationship to the president’s son, whose venture fund had taken a stake in the recipient company three months earlier.
Whether or not the sequence of events proves anything unlawful, or mere coincidence, it is exactly the kind of arrangement that erodes public confidence and raises a straightforward question that has so far gone unanswered: If the administration is serious about reducing American dependence on Chinese rare-earth supply chains, why does its industrial policy find a way to personally benefit the president’s family? Perhaps it’s a coincidence, but the public has a right to know more.
