China can survive tariffs. But if China cuts rare earths, the whole world stops.
China controls ~70% of global rare earth processing, essential for F-35 fighters, EVs, and semiconductors, giving Beijing unprecedented negotiating power over Washington. New Chinese export controls requiring government approval for rare earth products triggered Trump's threat of 100% tariffs and software restrictions, reigniting the trade war.
- China processes approximately 70% of the world's rare earth metals
- A single F-35 fighter jet requires more than 400 kg of rare earth minerals
- Rare earth exports fell more than 30% in September compared to the previous year
- Experts estimate the US would need at least 5 years to match China's rare earth processing capacity
- Rare earths represent less than 0.1% of China's $18.7 trillion annual GDP
China's export restrictions on rare earth minerals—critical for advanced technology and military equipment—have become a strategic leverage point in escalating trade tensions with the US, disrupting months of relative calm in negotiations.
Two weeks ago, China's Ministry of Commerce released a document that seemed routine on its surface—Announcement No. 62 of 2025—but it shattered months of fragile peace in the trade war with the United States. The announcement imposed sweeping new restrictions on rare earth exports, tightening Beijing's already formidable grip on the global supply of materials that are woven into nearly every advanced technology the world depends on. From smartphone screens to F-35 fighter jets, rare earths are indispensable. A single F-35 requires more than 400 kilograms of these minerals for its stealth coatings, engines, and radar systems alone. China processes roughly 70 percent of the world's rare earth metals used in electric vehicle motors. Under the new rules, foreign companies now need explicit government approval before exporting any product containing even trace amounts of rare earths, and they must declare their intended use.
The move was a calculated reminder to Donald Trump of China's leverage. Within days, the president threatened an additional 100 percent tariff on Chinese goods and announced controls on critical software exports. Treasury Secretary Scott Bessent called it an act of economic aggression. "This is China against the world," he said. "They've pointed a bazooka at the supply chains and industrial base of the entire free world, and we're not going to allow it." Beijing responded by accusing Washington of deliberately stoking panic and unnecessary misunderstanding, insisting that export licenses for civilian use would be approved as normal. But the damage to the negotiating atmosphere was already done. Within a week, the two largest economies imposed new port tariffs on each other's vessels, escalating tensions that had cooled considerably since May, when senior officials from both countries had negotiated a temporary truce.
The timing was no accident. Trump and Chinese President Xi Jinping are expected to meet later this month, and experts told the BBC that Beijing's rare earth restrictions have fundamentally altered the balance of power heading into those talks. Naoise McDonagh, a professor of international business at Edith Cowan University in Australia, noted that the move "will shock the system" by targeting vulnerabilities in American supply chains. "The timing has drastically altered the negotiation schedule that the United States wanted," she said. The strategic value of rare earths far exceeds their economic worth to China. These minerals represent less than 0.1 percent of China's annual GDP, which totals $18.7 trillion. Yet by restricting their flow, Beijing has found what one analyst called its "best immediate lever" to pressure Washington into concessions.
China's dominance in rare earth processing did not happen by accident. Over decades, the country has built an enormous talent base in the field and developed research and development networks that are years ahead of competitors. Marina Zhang, a critical minerals researcher at the University of Technology Sydney, explained that even if the United States and all its allies committed to developing alternatives, they would need at least five years to match China's capacity. Australia has large deposits of rare earths and positions itself as a potential rival, but its production infrastructure remains underdeveloped, making processing expensive. The United States and other nations are investing heavily to reduce dependence on China, but the gap remains vast.
China's export numbers tell part of the story. Official figures show that rare earth exports fell more than 30 percent in September compared to the previous year, following restrictions announced in April that had triggered a global supply crisis before deals with Europe and the United States eased the shortage. Yet analysts expect the export decline to have minimal impact on China's economy. The real damage, if any, will be felt elsewhere—in factories across the developed world that depend on these materials to function. As one expert put it, China can endure American tariffs and semiconductor restrictions, but if Beijing cuts off rare earth supplies, it could paralyze entire industries globally. That asymmetry is the crux of Beijing's advantage.
Still, both sides have left doors open for negotiation. Bessent, despite accusing China of betrayal, said he believes Beijing is willing to talk and expressed optimism that tensions could ease. China's Foreign Minister Wang Yi, during a meeting with Stephen Schwarzman, the CEO of Blackstone, emphasized the need for dialogue and stable relations. What China has done, according to Sophia Kalantzakos, a professor at New York University, is "organize its affairs" before these crucial trade talks. By restricting rare earth exports, Beijing has positioned itself to extract maximum concessions from Washington. The United States has some countermoves available—it could offer tariff reductions, which would appeal to Beijing given how severely the trade war has hurt Chinese manufacturers. American exports to China fell 27 percent year-over-year. Washington could also threaten further restrictions on China's technology sector, particularly by blocking access to advanced semiconductors. Yet experts believe such measures will have limited effect. China has shown through its recent economic strategy that it is willing to accept considerable hardship to achieve long-term goals. The question now is whether either side will blink before the month ends.
Citações Notáveis
This is China against the world. They've pointed a bazooka at the supply chains and industrial base of the entire free world, and we're not going to allow it.— Scott Bessent, US Treasury Secretary
Even if the United States and all its allies converted rare earth processing into a national project, it would take at least five years to catch up to China.— Marina Zhang, critical minerals researcher at the University of Technology Sydney
A Conversa do Hearth Outra perspectiva sobre a história
Why does China's control of rare earths matter so much more than, say, oil or agricultural products?
Because rare earths are invisible but essential. You can see oil flowing; you can taste wheat. But rare earths are embedded in the technology that runs modern warfare and commerce. Cut them off, and entire supply chains freeze. China understood this decades ago and built expertise no one else has.
The article says China's rare earth exports are less than 0.1 percent of its GDP. How can something so economically small be so strategically powerful?
Economic value and strategic value are different things. A single key that locks a door might cost a dollar, but if you're the only one who has it, you control who enters. China's rare earths are that key.
Can't the US just build its own processing capacity?
In theory, yes. In practice, it would take five years minimum, and that assumes everything goes perfectly. China has spent decades building talent, research networks, and supply chains. You can't replicate that overnight.
So why would China restrict exports now, when negotiations are about to happen? Doesn't that seem like bad timing?
It's actually perfect timing. China is showing its hand before sitting down at the table. It's saying: we have leverage, and we're willing to use it. That changes what Washington thinks it can ask for.
What's the endgame here? Does China want to cripple the US economy, or is this just negotiating theater?
It's negotiating theater with real teeth. China doesn't want to destroy American industry—it needs American markets. But it wants Washington to understand that the cost of pushing China around is higher than Washington thought. The goal is a better deal, not economic war.
If the US can't match China's capacity for five years, what leverage does Washington actually have?
Tariffs, semiconductor restrictions, and the fact that China's economy depends on exports. The US can make things expensive for China even if it can't match rare earth capacity. But as one expert said, China can survive that. If China cuts rare earths, the whole world stops. That's the asymmetry.