China’s dominance over rare earth materials has long posed a serious threat to Western supply chains, and the United States urgently needs to build a strategic reserve of these critical resources, said Jeremy Siegel, professor emeritus of finance at the University of Pennsylvania’s Wharton School, during an interview on CNBC’s “Squawk Box” Monday.

“It’s scandalous that we don’t have a rare earth strategic reserve and that we’ve allowed China to monopolize 90% of rare earth refining,” Siegel said. “Where were we when the importance of these materials became so clear?”

Siegel’s comments come amid escalating U.S.-China trade tensions. On Friday, President Donald Trump announced plans for “massive tariffs” on Chinese goods after Beijing imposed restrictions on rare earth exports to the U.S. The move sparked market turmoil, wiping out roughly $2 trillion in value before stocks began to rebound Monday.

The U.S. has precedent for such a move: it established the Strategic Petroleum Reserve in 1975 following the Arab Oil Embargo. Analysts say a similar reserve for rare earths is essential, given that China mines about 70% of the world’s supply and refines 90% of it—materials used in everything from smartphones to fighter jets. “Export controls could create a choke point in global supply chains,” wrote Bank of America global economist Claudio Irigoyen in a note to clients Sunday.

Despite the trade friction, Siegel expressed optimism that Washington and Beijing would reach an agreement before Trump’s November 1 tariff deadline. “It’ll be worked out,” he said. “Trump’s comments are just a prelude to negotiations—he’s laying down his cards.”

Siegel, author of Stocks for the Long Run, added that the extended timeline suggests Trump is aiming for diplomacy rather than confrontation. “The November 1 date is actually the farthest he’s ever set for a tariff—he wants to solve this before it begins,” he noted.

Markets appeared to share Siegel’s optimism. The S&P 500 rebounded early Monday, recovering about 40% of Friday’s losses, while the Nasdaq Composite climbed roughly 2% as tech stocks regained momentum.

“Once this trade issue is resolved,” Siegel said, “there’s no reason the market can’t reach new highs, given all the other positive fundamentals in place.”