The intensifying economic rivalry between the United States and China has reached a new peak in 2025, with both nations introducing sweeping tariffs and export controls that are reverberating throughout global mineral supply chains. What began as a series of trade spats over intellectual property and market access has morphed into a broader strategic confrontation centered on technology, energy security, and industrial dominance. At the heart of this conflict are rare earth elements and other critical minerals that are essential for modern defense systems, electric vehicles, and renewable energy infrastructure.
This latest escalation unfolded in April and May, when the United States announced a sharp increase in tariffs on Chinese electric vehicles, batteries, and solar components. In retaliation, China imposed new export controls on a suite of rare earth minerals, including neodymium, dysprosium, and terbium—materials vital for high-performance magnets used in both civilian and military technologies.
As reported by The Verge, the restrictions have sent shockwaves through global markets, prompting urgent questions about how to secure access to these strategic resources and whether mineral nationalism is undermining efforts toward a green energy transition.
From Trade Dispute to Strategic Resource War
The trade conflict between the two largest economies in the world has always had multiple layers: from commercial competition to questions of national security. But in 2025, a new frontier has emerged—access to the materials that will define future power.
For decades, China has dominated the global supply of rare earth minerals, refining more than 80% of the world’s supply. This dominance is not accidental. It stems from a coordinated state strategy that has paired resource nationalism with global manufacturing leverage. The United States, in contrast, has long outsourced mineral processing and is now scrambling to onshore capabilities that were once seen as niche or uncompetitive.
In May, the Biden administration invoked new emergency authorities to boost domestic production under the Defense Production Act, echoing measures taken in 2020 during the COVID-19 pandemic. Simultaneously, U.S. tariffs on Chinese EV components increased to 145%, a move designed to shield domestic industries and accelerate “Made in America” clean tech investments.
China’s response was swift. In a rare joint declaration from its Ministry of Commerce and State Administration for Market Regulation, Beijing announced it would limit the export of high-purity rare earth oxides and require special permits for companies seeking to sell these materials abroad. According to insiders cited by The Washington Post, the move was both a retaliatory measure and a signal: China is willing to weaponize its position in the global mineral hierarchy.
Global Supply Chains Under Pressure
The effects have been immediate. Prices for rare earth magnets surged by more than 30% on commodity exchanges, and downstream manufacturers in Europe, Japan, and South Korea expressed concern over delivery disruptions. Analysts at the International Energy Agency warned that the current trade war could jeopardize global decarbonization timelines by delaying the production of wind turbines, electric motors, and energy storage systems.
Supply chain managers now face a daunting landscape marked by bottlenecks, regulatory uncertainty, and a growing divergence between Western and Chinese standards. Western automakers that rely on rare earth imports for EV motors must now either find alternative sources or redesign systems to accommodate different materials, a process that could take years.
The policy implications extend well beyond technology and trade. By making critical minerals a battlefield, the U.S. and China have effectively framed resource access as a matter of national sovereignty. This risks undermining global cooperation on climate goals, especially as both countries invest in parallel systems of trade alliances, infrastructure, and technological standards.
A Fracturing Global Order
This fracture is increasingly visible in multilateral forums. While the U.S. and EU push for “friend-shoring” and “trusted trade corridors,” China is deepening its relationships with mineral-rich countries through the Belt and Road Initiative and strategic partnerships in Africa and Central Asia.
Recent diplomatic maneuvers underscore this split. In April, the U.S. held a Critical Minerals Summit in Washington with allies including Australia, Canada, and Japan, announcing new joint investments in lithium, graphite, and rare earth mining. Days later, China hosted its own summit in Nairobi, where it unveiled a $3 billion mineral infrastructure package for East African nations, including support for local beneficiation and processing.
For countries caught between these two poles, the choice is fraught. Aligning with the U.S. may bring access to technology and capital but may also come with pressure to cut ties with Chinese buyers. Aligning with China may offer short-term revenues and infrastructure, but at the cost of political leverage and long-term autonomy.
Industry Responses and Long-Term Implications
Industry leaders are not waiting for clarity. Multinational manufacturers like Siemens, Ford, and Panasonic are accelerating plans to localize supply chains. Mining companies in the United States, Australia, and even Greenland are experiencing a surge in investor interest, as governments offer tax breaks and fast-tracked permits.
Still, new mining projects are not quick fixes. It can take up to 10 years to bring a new rare earth mine online, and the environmental concerns associated with extraction and refining have triggered local opposition, even in mineral-hungry economies. In the U.S., for instance, Native American communities have raised objections to mining projects near sacred lands, arguing that energy security must not come at the expense of Indigenous rights.
Moreover, even with new investments, it is unlikely that the West will be able to fully decouple from Chinese mineral processing in the near term. Most rare earths require advanced metallurgical expertise and specialized facilities, areas in which China continues to lead.
An Uncertain Future
The escalation of the U.S.–China trade war has transformed what was once a technical question of industrial policy into a geopolitical standoff with planetary consequences. The zero-sum logic now governing critical mineral supply chains is both a symptom and a driver of broader economic fragmentation.
As the world faces the dual challenge of climate change and global insecurity, the need for cooperative frameworks has never been more urgent. Yet the weaponization of resource access makes such cooperation increasingly elusive. Unless a new equilibrium can be reached, one that balances strategic autonomy with global responsibility, the mineral foundations of the green transition may become a source of division rather than progress.
Reference
Huang, J. (2025, May 10). A new cold war is brewing over rare earth minerals. The Verge. https://www.theverge.com/electric-cars/665198/rare-earth-magnet-ev-motor-china-tariff
Sullivan, M. (2025, April 24). U.S. agencies alarmed by China’s curbs on exports of rare-earth minerals. The Washington Post. https://www.washingtonpost.com/business/2025/04/24/rare-earths-trade-war-us-china/
Office of the United States Trade Representative. (2025). Tariff increases on critical minerals and EV components. https://ustr.gov
International Energy Agency. (2025). Critical Minerals Market Review 2025. https://www.iea.org/reports/critical-minerals-market-review-2025
Reuters. (2025, May 12). Global stocks rally after US, China pause tariff war, but uncertainty remains. Reuters. https://www.reuters.com/world/china/us-china-reach-deal-slash-tariffs-officials-say-2025-05-12/