China wields rare earths to threaten US economy

As of April 10, 2025, escalating trade tensions have raised concerns regarding China's influence over global markets, particularly in the rare earths sector, where it commands approximately 90% share. These rare earth elements are critical to various high-tech industries, including defense systems, energy production, and advanced electronics, making them a significant lever in international trade relations. Experts warn that should the current trade war between the United States and China intensify, China may resort to restricting rare earth exports or liquidating U.S. treasuries. These actions would not only disrupt U.S. defense capabilities but could also lead to a global financial crisis, impacting both nations' economies severely. China has been consolidating its power under President Xi Jinping, who, as he approaches a potential fourth term, is in a position to leverage economic policies more aggressively against perceived adversaries. While trade wars typically inflict harm on both participating countries, China’s unique control over its rare earth resources places it in a strategically advantageous position. Analysts emphasize that the consequences of a cut in rare earth exports would not only hit U.S. manufacturers but also ripple through global supply chains dependent on these essential materials. In response to such threats, it is crucial for U.S. policymakers to explore alternative sources for rare earths and develop strategies to mitigate China's economic pressure. Moreover, China has demonstrated its willingness to utilize such measures by previously imposing restrictions on other essential materials like germanium, gallium, and graphite, which are vital for technological advancement. Industry leaders point out that the U.S. struggles with an insufficient domestic supply of these elements, making it increasingly vulnerable to external disruptions. A concerted effort to secure independent supply chains for rare earths and related materials will be necessary to safeguard U.S. economic and national security interests. As the geopolitical landscape evolves and the rivalry between the two largest economies grows more intense, the focus on critical minerals and resources will undoubtedly become a paramount aspect of both economic and defense policymaking. It is clear that China's rare earths could become the new frontier in the ongoing U.S.-China trade conflict, and understanding this dynamic is essential for any future negotiations.