In the great power contest of the 21st century, rare earth elements, the obscure but essential building blocks of modern technology, have emerged as a potent geopolitical lever. From wind turbines and electric vehicles to missile systems and smartphones, these 17 metallic elements are embedded deep in the fabric of contemporary life. And with China producing close to 70% of the world’s rare earths from mines and controlling over 90% of global processing, the country has long held an outsized influence over this critical supply chain.
Now, Chinese leader Xi Jinping has chosen to flex that dominance with sweeping export restrictions on rare earths, ramping up a long-simmering trade conflict into a full-blown strategic standoff. But as history, economics, and technological innovation suggest, this gambit is more likely to erode China’s own power over time even as it delivers short-term disruption across the global economy.
Xi’s weaponization of rare earths began in earnest in April 2025, when China abruptly halted exports of several key rare earths, including the heavy variants vital to defense technologies and high-performance magnets. The move was cloaked in the language of national security and export control updates. Still, it was clearly a tit-for-tat response to ongoing U.S. restrictions on semiconductor technology, part of a broader tech war whose temperature has steadily risen in recent years.
Almost immediately, the consequences were dramatic. Ford Motor was forced to shutter a Chicago factory. European production lines halted. Indian and Japanese carmakers scaled back operations. The European Union’s Ursula von der Leyen decried the restrictions as “economic blackmail.” At the same time, U.S. Treasury Secretary Scott Bessent accused China of taking a “bazooka” to the industrial base of the free world.
Yet despite the economic convulsions, global leaders haven’t capitulated. If anything, China’s move appears to have reinforced the West’s resolve to decouple from Chinese-controlled critical minerals supply chains, a strategic shift that may ultimately unravel Beijing’s mineral monopoly.
To understand the roots of China’s dominance, one must look beyond geologic abundance. Contrary to their name, rare earths are not especially rare; cerium, for example, is more common than copper. But the grinding, environmentally toxic process of extraction and separation has long made them an unappealing venture for Western democracies with stronger environmental safeguards.
China seized that opportunity. In the early 1990s, Deng Xiaoping famously quipped, “The Middle East has oil; China has rare earths.” The country poured state investment into mining, refining, and magnet production. Lenient environmental regulations and state subsidies allowed Chinese producers to swamp global markets with cheap goods, a tactic that wiped out foreign competition and entrenched China’s near-monopoly. But that leverage is brittle. Unlike advanced chipmaking or aerospace engineering, rare-earth processing is replicable with adequate investment and incentive. Industry analysts note that reducing China’s market share from 90% to even 80% would double non-Chinese supply capacity, dramatically shifting power away from Beijing.
Xi’s bold move in 2025 is proving to be the catalyst the world needed. From Washington to Brussels to Canberra, the race is now on to break China’s grip and not just through mining, but across the entire rare-earths ecosystem. In the U.S., the Pentagon has taken a $400 million stake in MP Materials, which operates the Mountain Pass mine in California, the country’s only major rare earths facility. Apple has committed $500 million to build rare-earth magnet facilities in partnership with MP. Australia is scaling up its role, too, with Lynas Rare Earths producing heavy rare earths in Malaysia and soon in Texas, thanks to U.S. defense contracts.
Backed by successive governments, Australia is also deepening its cooperation with the U.S. through a multi-billion-dollar initiative to develop new mining and processing capabilities. This deal, signed in 2025, could prove monumental in establishing a Western-aligned rare earths supply chain. Japan, burned by a 2010 Chinese embargo, has built strategic stockpiles and reduced its dependence on Chinese imports from 90% to 60%. Meanwhile, startups across North America and Europe are exploring recycling and substitution technologies, some already in use by carmakers like BMW and Renault, whose EVs use motors free of rare-earth magnets.
The innovation imperative is gaining particular momentum. Researchers are pushing new ways to design magnets and electric motors without rare-earth materials. As prices spike and supply volatility grows, companies are investing in redesigning supply chains and underlying technologies to avoid being held hostage again.
By leveraging its dominance in rare earths as a geopolitical weapon, China is likely sowing the seeds of its own waning influence. Strategic coercion through control of supply chains may yield tactical wins such as temporary reprieves from Western tariffs or greater negotiating clout in trade talks, but it rarely secures lasting dominance.
Beyond the geopolitical backlash, China must also contend with potential economic fallout. Experts caution that curbs like these could inflate rare earth prices and invite overinvestment in alternative supply routes. “Every time Beijing tightens the spigot,” says political scientist Ryan Kiggins, “it accelerates the political will and capital necessary to erode its own dominance.”There are signs that this erosion has already begun. Companies like Critical Metals Corp, with its massive Tanbreez deposit in Greenland and a lithium project in Austria, are attracting strategic investments from Western governments and funds. Rear Admiral Peter Stamatopoulos, former Chief of the U.S. Navy Supply Corps, recently joined its advisory board, underscoring the national security salience of securing minerals freedom from Chinese control.
While Xi may see rare earths as a pressure tool, his weaponization strategy ultimately may prove to be a miscalculation. Unlike more restricted resources like oil, scarce minerals can be substituted, recycled, or sourced anew with sufficient political and financial backing. The innovation unleashed by perceived scarcity and coercion could easily outstrip his country’s capacity to contain it.
Moreover, China’s own technology sector has been on the receiving end of U.S. export controls, spurring homegrown advances in semiconductors and AI. Beijing should recognize that the same adaptive logic applies to its rivals: restrictions invite resilience, not surrender.
In the long arc of trade wars and industrial competition, control is an illusion unless it can be sustained. And as the world pivots away from Chinese supply chains, the rare earths card may lose its magic. In weaponizing its dominance, China may have just begun dismantling it.