U.S. Trade Representative Katherine Tai said that China’s dominance of the rare earths sector could lead to vulnerabilities in American supply chains.

Tai said China’s dominant position in the rare earths market allows the country to “turn on the faucet and turn off the faucet” when it comes to sourcing materials, according to CNBC. She explained that the U.S. will continue to be vulnerable to that leverage unless it's able to create new supply chains.

Tai also said that the U.S. is not where it wants to be in terms of supply chains and its reliance on China. She clarified that the U.S. is aware it's vulnerable to China and that the country wants to get to a place where it has more confidence and diversity in its supply chains.

“The advantage in terms of China’s dominance isn’t necessarily a natural advantage,” Tai said. “It’s not that they have more rare earths, but that they were able to pursue coordinated industrial and trade policies that allowed them to corner the market.”

Tai expressed hope that the U.S. would be able to create more economic opportunities and supply chain diversity by working closely with India despite the recent passage of import licensing requirements for American-made tech equipment.

“The stars really are aligning between the United States and India, and that’s across all of the policy areas,” Tai said, who described the relationship between the U.S. and India as “experiencing new heights."