The last week could just be a preview to China weaponizing its entire supply chain, the investor told Fortune.

President Donald Trump on Friday threatened China with a "massive" increase in tariffs in retaliation for Beijing imposing strict controls on rare earths.

Siegel told CNBC's "Squawk Box" that the U.S. should create a rare earth minerals reserve as rising trade tensions threaten global supply chains.

The last week could just be a preview to China weaponizing its entire supply chain, the investor told Fortune.

China will not allow the export of rare earth materials for use by foreign militaries under restrictions announced last week.

Top Trump administration officials, in an unusual staged attack, called China's plans to curb exports of rare earths "economic coercion".

As the trade war continues to escalate, China has hit back at Trump by suspending exports of rare earth minerals.

Beijing last week announced sweeping controls on rare earths ahead of an expected meeting between President Donald Trump and President Xi Jinping.

China holds a near-monopoly in the processing of the elements crucial for making everything from smartphones to fighter jets.