In the relentless tug-of-war between the world’s two biggest economies, China is once again reaching into its geopolitical arsenal and pulling out a weapon that has long sat quietly in reserve: its near-monopoly over rare earth minerals.
As the Donald Trump administration’s aggressive trade tariffs on Chinese goods reach historic levels, most notably a 104% tariff, Beijing is striking back by weaponising a segment of the global supply chain that it controls like no other. This isn’t just about retaliatory theatrics. Beijing is increasing export restrictions on seven varieties of rare earth minerals, a class of seventeen elements essential for the operation of our contemporary high-tech economy.
From stealth bombers to cellphones, this action has significant consequences that could undermine worldwide manufacturing sectors strongly dependent on these inputs, thus threatening stability.
China’s strategic asset
Almost 70% of the rare earth minerals produced worldwide come from China. High-tech manufacturing depends on these 17 factors. China also dominates the refining and processing stages, exerting almost total control over the world market.
Other nations, including the United States and Europe, have not invested enough in building alternative supply chains or processing facilities. Rare earth elements (REEs) may not be household names, but they are foundational to everything from iPhones to electric vehicles to advanced missile systems. The nation has used this pressure before, notably in 2010 during a territorial dispute with Japan, but the scope and timing of the current export restrictions reflect a notable increase.
No other country approaches China’s supremacy in this area. The complicated rare earth supply chain requires not only extraction but also high-level processing and refining, areas where China maintains near-total control. Western nations, including the United States and European Union (EU) member states, have long understood this vulnerability, but little has been done to mitigate it. Now, that weakness is being exploited.
Importantly, this is not Beijing’s response to Biden-era semiconductor controls. The new export restrictions are a direct reaction to the Trump administration’s 104% tariffs on Chinese electric vehicles and related products. This move marks the first time that Beijing is officially implementing such sweeping restrictions under the Trump regime.
During the Joe Biden era, China did not impose such rare earth export controls. The timing signals a sharp escalation in trade retaliation.
The backbone of high-tech manufacturing
Rare earths are indispensable in the manufacture of electric vehicle motors, especially those using neodymium, praseodymium, and dysprosium. They are also used in wind turbines, which rely on rare earth magnets. Consumer electronics such as smartphones, tablets, and TVs incorporate these elements.
Military hardware, including guided missiles, fighter jets, and satellite systems, depends heavily on them. The same is true for medical technology like MRI machines and advanced imaging equipment, as well as emerging fields like quantum computing and AI, which require specialised magnets and sensors.
Simply put, rare earth minerals are crucial to the future and are essential to the present. Without them, entire industries grind to a halt.
Comparing semiconductor bans and mineral controls
The Biden administration banned sales of advanced semiconductors and chipmaking equipment to China to slow Beijing’s AI and military development. China responded by accelerating domestic chip development, with firms like SMIC taking the lead. In contrast, the US and Europe are still heavily dependent on China for rare earths.
China’s export control hit US manufacturing more directly than Biden’s chip ban hit Chinese tech. While China managed to continue its tech advancements despite the semiconductor restrictions, the West does not have a clear or immediate substitute for the rare earth supply.
Rare earths are also mined in Australia, the United States (notably in Mountain Pass, California), Canada, Myanmar, Vietnam, India, and Brazil. However, none of these sources can match China’s capacity or cost-efficiency.
Many of these projects are still in exploration or early development stages. Refining and processing infrastructure is even more limited outside China. The US has rare earth deposits but lacks domestic refining capacity.
Efforts to revive domestic production are slow due to environmental, regulatory, and cost barriers. The Pentagon has funded some rare earth initiatives, but they’re years away from meeting industrial-scale demand. Europe, meanwhile, has barely started its journey.
Adding environmental concerns and local resistance to mining projects clarifies why the West struggles to increase domestic production despite recognising the strategic risks.
A world domino effect
Beijing’s move to forbid rare earth exports will probably cause world rare earth material prices to rise sharply. Along with disturbances in defence and space projects, it will cause manufacturing delays in high-tech industries.
In expectation of long-term shortages, countries could start hoarding goods. Attempts to diversify supply chains will quicken, and outside of China, new investments in rare earth exploration and processing will most certainly explode.
Rising production costs and manufacturing delays will affect economies around the globe. For the United States, this action greatly worries Washington. Military contracts, manufacturing of electric cars (a Biden focus), and even consumer electronics could experience delays and cost overruns.
Germany, for example, mostly depends on imported rare earths for its automotive industry. Nations like France and the United Kingdom, pursuing dramatic green energy transitions, will also feel the pressure.
Europe is as dependent as the US on China for rare earths. The German automotive industry will be hit particularly hard. The continent’s goals for green energy, including wind energy, electric vehicles, and solar infrastructure, rely on a stable supply of rare earth materials.
While the EU has announced plans for rare earth independence, those plans are still years behind. Europe faces tough choices: align more closely with the US trade strategy or negotiate independently with China to preserve access.
European tech firms, automakers, and clean energy projects depend on a stable supply of REEs. With Beijing tightening the screws, the EU might have to choose between aligning more closely with the US trade stance or finding a middle ground to preserve access. In either case, Europe is set to suffer.
Rare earths in warfare and industry history
Rare earth elements have been strategic commodities long before the smartphone era. During the Cold War and the space race, they were used in radar systems, missile guidance, and nuclear submarines.
These elements were also vital in the development of stealth technologies and nuclear-powered aircraft carriers. In the 1980s, the United States led the world in rare earth mining, with Mountain Pass in California serving as a global hub for extraction and initial processing. At that time, the US was not only producing the majority of the global supply but also setting the technological standards for its use in defence and aerospace.
However, the combination of rising environmental concerns, public opposition to hazardous waste, and increased compliance costs with domestic regulations made domestic mining unsustainable. This opened the door for China, which strategically scaled up its production, offering rare earths at prices Western producers could not match.
Beijing also acquired key processing technologies and expertise, allowing it to dominate the full value chain from raw material to finished components. As a result, production rapidly shifted overseas. China stepped in, capitalising on low labour costs and lax environmental standards.
In the 1980s, the US led the world in rare earth mining. However, lax environmental laws and cheap labour in China allowed Beijing to undercut prices, leading to the decline of US operations and the rise of Chinese dominance, a strategic mistake now haunting Washington.
This shift was not just an economic adjustment; it marked the beginning of a new geopolitical dynamic where China began to treat rare earths as instruments of power projection.
Environmental and ethical implications
Rare earth extraction is often dirty, dangerous, and linked to pollution and displacement. The toxic waste lakes of Baotou, China, highlight the environmental toll. These ponds are filled with a black, radioactive sludge that can take centuries to degrade.
Mining operations in southern China have also led to deforestation and the destruction of arable land. Local communities suffer from high cancer rates, contaminated groundwater, and reduced agricultural productivity.
In places like Myanmar and the Congo, associated mining operations for rare earths and critical minerals have led to deforestation, water contamination, and human rights abuses. There are growing concerns about child labour, unregulated artisanal mines, and violent territorial disputes funded by mineral wealth.
Rare earth extraction is often dirty, dangerous, and linked to pollution and displacement. Western nations, committed to high environmental standards, have long baulked at domestic production, giving China, with more permissive laws, the upper hand. Ethical sourcing has become a major concern for Western governments and consumers, leading to discussions about certifying “clean rare earths” and imposing new import standards.
Japan has led the charge in urban mining, investing in the recovery of REEs from used electronics and industrial waste. It has developed robotic systems that can dismantle smartphones and extract trace amounts of neodymium and dysprosium from discarded magnets.
Europe and the US are exploring similar initiatives. Researchers are experimenting with biometallurgy, using bacteria to extract metals from scrap. Though not a replacement for mining, recycling could provide critical backup and help close the loop on tech waste.
A mature recycling ecosystem could eventually meet up to 20% of global REE demand. Policymakers are now discussing the establishment of e-waste hubs and circular supply chain zones to support this goal.
Impact on developing nations
The ripple effects of a rare earth squeeze are global. Countries in Africa, Southeast Asia, and Latin America, where electrification and clean energy adoption are priorities, could face rising costs and project delays.
If prices surge, so do the costs of solar panels, batteries, and electronics, stalling developmental goals and exacerbating technological inequality. Nations like Kenya, Bangladesh, and Brazil, which are pushing for green infrastructure, may find themselves locked out of critical technologies.
For example, electric public transport systems, solar grid rollouts, and affordable smart devices may suddenly become financially unviable.
Moreover, as wealthy nations rush to secure alternative sources, they risk crowding out smaller economies, driving a wedge between the Global North and South.
Finding strategic responses
While the European Union has proposed the Critical Raw Materials Act, the US has enacted the CHIPS and Science Act and the Inflation Reduction Act. These programmes seek to encourage processing technologies, subsidise domestic mining, and create strategic connections. The CHIPS Act provides subsidies for domestic businesses focusing on sustainable extraction techniques and billions in investment for rare earth research and development (R&D).
The EU has also allocated funds for strategic stockpiling and circular economy initiatives. Talks of a “rare earth alliance” with Australia, Canada, and other like-minded countries suggest a coordinated response to China’s dominance.
With this global approach, the goal is to create a safe, diversified, and ecologically conscious rare earth supply chain that is resistant to geopolitical shocks. These discussions also involve nations like Japan and South Korea, which recognise the shared vulnerability among allies.
Big companies are making changes. Apple is increasingly focused on recycling rare earths. From speakers to Taptic Engines to MagSafe assembly, its newest products feature 100% recycled rare earths in components. While researching motor technology that reduces reliance on rare earth resources, Tesla has pursued contracts with Lynas and other non-Chinese suppliers.
Through federal procurement rules, defence corporations such as Lockheed Martin and Raytheon are advocating for REE supply security. Contingency planning is no longer optional across sectors; it has become strategic. Businesses are mapping out several levels of suppliers, funding replacement R&D, and pushing governments for tax breaks tied to mineral independence.
China’s dual circulation strategy
China’s rare earth policy aligns with its “dual circulation” strategy, which emphasises domestic resilience over export dependence. This strategy aims to create self-sufficiency in critical technologies while maintaining export dominance in low- to mid-tech manufacturing. By restricting rare earth exports, Beijing pressures rivals and strengthens its internal capabilities, ensuring that key sectors such as AI and energy remain insulated.
The central government has also linked rare earth planning with its “Made in China 2025” initiative, which seeks to dominate high-tech fields. In essence, rare earths have become both a shield and a spear in China’s economic doctrine.
While effective in the short term, China’s restrictions may backfire. Many of its tech giants depend on global supply chains. Companies like Huawei, Lenovo, and CATL rely on Western-designed components and foreign markets for growth. If the West accelerates diversification and decoupling, Chinese firms may lose access to advanced tools, foreign investment, or international markets.
There is also a risk of retaliatory measures. Countries could impose tariffs, sanctions, or restrictions on other Chinese exports, such as lithium batteries or solar panels. The rare earth weapon, which was once used, may galvanise rivals into building a more resilient and self-sufficient global order that ultimately leaves China more isolated.
As tensions rise, we may witness a rare earth arms race or the emergence of a NATO-style alliance for critical minerals. Countries could nationalise resources, hoard supplies, and forge exclusive trade blocs. Global institutions like the IMF and World Bank might be pressured to treat mineral security as part of economic development policy.
Private investors could shift capital from fossil fuels to mining projects, creating a new boom and potentially a new bust.
New era of strategic commodities warfare
What we are witnessing is not a temporary reaction. China’s control over rare earths is a frontline asset in a prolonged trade and tech war. With Trump imposing steep tariffs and Beijing responding with surgical strikes on supply chains, the world is hurtling into a new era of economic warfare where commodities, not just capital, are the weapons of choice.
The world is entering a new era where the control of strategic resources, not just financial capital or trade tariffs, will define geopolitical dominance. China’s tightening grip on rare earth minerals is not merely a retaliatory gesture in response to US tariffs, but is also a long-term recalibration of power, influence, and economic leverage.
With its export controls, Beijing has sent a loud, unmistakable message: it will use every asset at its disposal to defend its interests and shape the global order.
Rare earth elements are no longer obscure components tucked away in the background of our gadgets and machines. They are central to modern civilisation, embedded in every facet of high-tech manufacturing, green energy innovation, defence infrastructure, and emerging technologies like AI and quantum computing.
China’s near-monopoly over these elements means that the world’s dependence is not only economic but deeply systemic. If rare earths are disrupted, entire industries could come to a halt.
The global response to China’s rare earth export controls will define the trajectory of international relations and industrial strategy for years to come. Countries like the US, Japan, Germany, and others will have no choice but to accelerate their investments in alternative mining, processing, and recycling infrastructure.
This shift will demand capital, as well as political will, regulatory reform, and public support, especially in democracies where environmental concerns and community resistance have historically delayed mining projects.
China’s move could also reshape the alliances of the 21st century. Just as oil shaped the geopolitical contours of the 20th century, rare earths could drive the formation of new trade blocs, technological pacts, and even defence agreements.
We may witness the birth of a global rare earth alliance, with nations banding together to secure critical mineral supply chains. This could lead to a bifurcated global system, where countries are forced to choose sides based on resource access and technological sovereignty.
At the same time, the West must confront its past failures. For too long, it ceded the rare earth sector to China in the name of cost savings and environmental convenience. That strategic complacency has now become a liability. Rebuilding rare earth capacity will not be easy or cheap, but it is no longer optional.
Meanwhile, developing nations face the danger of being sidelined or exploited as the mineral race intensifies. Rising costs and resource hoarding could derail sustainable development goals and widen the tech divide between rich and poor nations. Ethical sourcing, environmental safeguards, and fair-trade principles must be part of the new rare earth order.
Ultimately, the rare earth confrontation is not just a skirmish in the broader US-China rivalry. It serves as a wake-up call. In this new era of strategic commodities warfare, dominance will belong to those who secure today’s supply chains and the innovation ecosystems of tomorrow. The global balance of power may well hinge on who controls the dirt beneath our feet and how responsibly they wield it.