As tensions escalate between the United States and China in their ongoing trade war, Beijing appears to have an invaluable trump card that could tip the balance in their favor: rare earth elements. These 17 key minerals, used for manufacturing smartphones, electric vehicles, wind turbines, military equipment and military grade material production, are predominantly produced and processed by China which produces over 60 percent of all global supply.
China has unwittingly hinted at retaliatory measures against former President Donald Trump’s trade policies and tariff threats in response to U.S. tariffs on billions of dollars worth of Chinese goods; yet tensions continue to escalate under renewed Republican rhetoric ahead of 2024 U.S. elections. China dominates rare earths which provide it with an economic advantage; therefore retaliating by exploiting this as an economic weapon against Washington may soon follow suit.
Rare earths are difficult to replace; developing new sources and processing facilities would take years of investment, giving China a distinct short to medium term advantage in rare earth exports to the US. Some experts argue that restricting Chinese rare earth exports could interfere with critical supply chains for American tech and defense industries, harming both their future profitability as well as disrupting American tech/defense businesses.
China has already demonstrated its willingness to weaponize rare earths during past disputes, such as during its 2010 conflict with Japan. Now, as U.S.-China tensions broaden economic and geopolitical implications, rare earths could once more become a significant strategic weapon in this rivalry.
Recently, China has strengthened its control over the rare earth industry by consolidating key firms and tightening environmental and export regulations. At the same time, they have intensified efforts towards downstream industries which rely heavily on rare earths such as electric vehicle production and green technology development – two fields heavily dependent upon rare earths for production.
As Trump and other hardliners push for an increasingly confrontational relationship with China, Beijing could turn to rare earths as a countermeasure – potentially elevating stakes in global trade conflict while showing Washington just how powerful China’s mineral assets may be in comparison with tariffs.
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