Rare earth elements are a type of material required for many different technological manufacturing processes. There are 17 types of rare earth and they are indispensable for manufacturing. These materials are critical components in many industrial processes, used to create alloys, chemical process components, electronics, vehicles, military weapons and many more.
China controls 90% of the processing of these rare earth elements, and mines around 70% of them, in this respect; China almost completely controls this critical market.
Earlier this year in April, China specifically tightened control over the export of 7 heavy rare earths, extremely crucial to the defence & auto sector, requiring the approval of the central government before shipping them abroad anywhere. This was a key bargaining chip that China used to leverage against the unfair trade tariffs imposed by the Trump administration.
Both the extraction and processing of these rare elements are costly and very polluting, with many countries refusing to produce them because of the radioactive waste involved. China’s dominance in this market has been the work of decades of strategic investment.
Deng Xiaoping, the Chinese leader between 1978 and 1989 once famously said: “The Middle East has oil and China has rare earths.”
The US relies on China for 70% of imports of rare earths, making this a key card that China has used to leverage an end to the pointless trade war enacted by the Trump administration.
Recently Xi Jinping and Donald Trump met in South Korea to engage in a two hour summit, the result of which is that the US has pulled back from its tariff attacks on China, and China has agreed to pause its newly announced October rare earth export controls.
The Trump administration is trying to spin this as a win for the country, when in actuality, this has been a costly and doomed experiment of trying to blackmail China with an ill-thought-out tariff policy. Essentially we are just back to the state of affairs earlier this year, with only losses to show for the US economy. The only person who has gained anything, has been Trump and his sycophants, playing the markets for fools and enriching themselves with billions from illegal market manipulation. American citizens and corporations have suffered needlessly under such poor leadership, with US manufacturing suffering in particular, the exact opposite of Trump’s stated goals.
US Treasury Secretary Scott Bessent claimed that China had made a mistake in using rare earths as a leverage, since now within a few years, he indicates the US will diversify and secure its own processing of these critical minerals. However whether this will come to realisation is another matter, as such a move would require massive investment and any processing in the US would be more costly than that in China, thus making it unprofitable in the long run.
Commenters on the issue online pointed out:
“This just makes the US look stupid for not securing rare earths sooner. It has been a concern for years.”
“The risk was known but nobody was prepared to spend money pulling rare earth minerals from elsewhere, while they could get them at reasonable prices from China. But now the fuss has died down, it remains to be seen if the US or other Western countries are prepared to spend large sums of money, just to diversify their supplies of rare earths.”
“So they are back to the position they were in before Trump started threatening China with tarriffs? It’s amazing that some people are fooled by this circus clown.”
“Market manipulation for his friends + convincing his base he’s a great negotiator, ending where everyone started. You have to admire the ruthlessness of it all.”
Meanwhile China’s industrial profits have surged more than 20% in September, which has been the biggest jump in nearly two years.
Whilst Trump is claiming that this particular part of the trade war has now been solved and concluded, it remains to be seen what other new threats the US can conjure up to distract from their continued failure to manage their economy properly.
It increasingly looks like the world will now rely on the pragmatism of China rather than the deterioration of the US under Trump.
