Wharton's Jeremy Siegel says it's 'scandalous' the U.S. doesn't have a rare earths reserve

China’s control over crucial rare earth materials has been a “threat for a long time” to Western supply chains and the U.S. should create a strategic reserve of the metals, University of Pennsylvania professor emeritus of finance Jeremy Siegel told CNBC’s “Squawk Box” Monday.

“It’s scandalous that we don’t have a rare earth strategic reserve [and] that we let China monopolize 90% of refining rare earth materials,” Siegel said. “Where were we, realizing the importance of these?”

Siegel’s strategic reserve proposal comes as the U.S.-China trade war intensified Friday, with President Donald Trump vowing to impose “massive tariffs” on Beijing in response to its limits on rare earth mineral exports to the U.S., and threatening to cancel a planned meeting with Chinese President Xi Jinping. Trump’s announcement erased $2 trillion in value from the stock market.

The U.S. created the Strategic Petroleum Reserve in 1975 in response to the 1973 Arab Oil Embargo.

Today, almost three quarters of the world’s rare earth minerals, used in everything from smartphones to fighter jets, are mined in China, which processes 90% of the metals, according to Bank of America analysts.