Introduction
The battle between the United States and China over technology dominance has entered a new and dangerous phase. This time, it’s not about semiconductors, tariffs, or intellectual property — it’s about Rare earth elements.
China, which controls the vast majority of the global rare earth supply, has unleashed this powerful weapon, sending shockwaves through the tech world, global markets, and geopolitical arenas.
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What Are Rare Earths and Why Are They So Important?
Rare earth elements (REEs) are a group of 17 metallic elements vital for high-tech industries. They are essential for making:
- Electric vehicle motors
- Wind turbines
- Smartphones
- Missiles and fighter jets
- Robotics and drones
In short, they are the building blocks of modern technology and defense systems.
While the name “rare” might suggest they are scarce, these elements are relatively abundant in the Earth’s crust. However, they are difficult and costly to mine and process in an environmentally safe way. T
hat’s where China took the lead — offering cheaper, large-scale mining operations and dominating 90% of global rare earth production.
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How China’s Grip Became a Strategic Weapon
China’s dominance in rare earths has long been seen as a potential geopolitical lever. Now, in 2025, that lever is being pulled.
In response to escalating U.S. tariffs on Chinese goods, Beijing halted rare earth exports. This move immediately sent global supply chains into turmoil. Electric vehicle makers, defense contractors, and consumer electronics companies suddenly found themselves at risk of running out of critical materials.
Prices of key rare earth elements like dysprosium and terbium surged. In Shanghai, dysprosium oxide prices jumped to $204 per kilogram, and international prices climbed even higher. Stockpiles built by companies like American Elements and MP Materials are depleting fast.
The result? Production delays, higher manufacturing costs, and a scramble to find alternative sources.
Industries Feeling the Squeeze
The industries hardest hit by the rare earth freeze include:
- Electric Vehicles (EVs): Motors for EVs require high-strength rare earth magnets. Without materials like neodymium and dysprosium, production slows down.
- Defense and Aerospace: Missiles, jets, and advanced military systems depend heavily on rare earth-based components.
- Consumer Electronics: Smartphones, laptops, and tablets use rare earths in screens, batteries, and speakers.
James Litinsky, executive chairman of MP Materials, called the situation a “national security emergency,” warning that America’s future warfare capabilities could be compromised if rare earth supplies are not secured soon.
https://www.yolegroup.com/product/report/overview-of-the-semiconductor-devices-industry-h1-2025
America’s Dilemma: A Hard Lesson in Supply Chain Risk
For years, experts warned about overreliance on China for critical minerals. Now, the United States is paying the price.
Efforts to revive domestic mining, such as projects in California’s Mountain Pass, are underway, but ramping up production will take years. Recycling rare earths from used electronics and finding new substitutes are promising strategies, but they are nowhere near large-scale implementation.
Meanwhile, China’s rare earth hubs, like Longnan, have ramped up mining to ensure domestic supply, while cutting off international exports.
What’s Next: Global Race for Rare Earth Independence
The rare earth showdown reveals deeper truths about modern geopolitics:
- Supply chains need diversification.
- Resources are now weapons, not just commodities.
- Technological leadership depends on secure material access.
Countries like Australia, Canada, and the U.S. are now fast-tracking investments in rare earth mining and refining. The European Union is also pushing for rare earth independence under its Critical Raw Materials Act.
However, rebuilding an alternative supply chain will not be easy or quick. Until then, China holds a powerful card in the global tech trade war.
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Conclusion
The tech trade war between America and China has evolved from a battle of tariffs to a war over essential resources. By halting rare earth exports, China has weaponized its dominance in a way that threatens industries, economies, and national security worldwide.
For the U.S. and its allies, this crisis serves as a wake-up call: securing the supply of critical materials is no longer optional — it’s a matter of survival in the new geopolitical landscape.
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