Earlier this week China introduced significant economic stimulus measures — including interest rate cuts — to support an economy that has been negatively affected by ongoing trade tensions. US and Chinese trade officials are now scheduled to meet in Switzerland to discuss ways to ease the dispute, which has unsettled global markets.
Minerals played a key role in bringing both sides to the discussion table. The timeline escalated quickly. On April 4 China’s commerce ministry imposed export restrictions on seven rare earth elements — samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium — as well as magnets used in the defence, energy and automotive sectors. This in response to US President Donald Trump’s tariff increases on Chinese products.
Overall, mineral export restrictions haven’t proven catastrophic. Over the past two years there has been a ramp-up of China’s export restrictions, including a full-on ban on commodities such as gallium, germanium, antimony, graphite and tungsten.
But April’s announcement was different. The US has virtually no alternative: until 2023 China processed 99% of the world’s heavy rare earth elements, with only limited production coming from a single refinery in Vietnam. However, that facility has been offline for the past year due to a tax dispute, leaving China with a de facto monopoly over global supply.
Rare earth elements are essential to the US national defence and economic security. For instance, an F-35 fighter jet contains more than 400kg of rare earths, while a Virginia-class submarine requires about 4,200kg. These materials are also found in everyday technologies such as smartphones and computers, play a critical role in medical equipment such as MRI scanners and cancer therapies, and are integral to numerous automotive components.
Just weeks after the new tariffs and mineral export restrictions were introduced, US treasury secretary Scott Bessent acknowledged that the ongoing trade tensions were becoming increasingly difficult to sustain and that he expected a
de-escalation in tensions between the two countries.
While factors such as market uncertainty played a role, concerns over mineral supply chain vulnerabilities became a catalyst for opening discussions between the two countries. In Washington, some estimates suggested that stockpiles of rare earths could be depleted within months — with serious implications for national security and key industries.
That is why the US is now moving at an unprecedented pace to secure new mineral supply chains. The goal is clear: to ensure future economic choices — and potential national security decisions, including those involving Taiwan — are not dictated by China’s ability to weaponise mineral export controls.
Every decision creates winners and losers, and as US-China tensions rise new beneficiaries are coming into focus. Countries with rare earth resources are among the top contenders. For example, the US International Development Finance Corporation is working on rare earth support for projects in Brazil, SA and Angola.
This trade war has taken an unexpected turn this year — I never expected dysprosium to top my list of concerns as the US and China escalate tariffs against one another. But it also underscores a fundamental truth: the mining industry is indispensable. Not only are minerals needed to manufacture just about everything (as the saying goes, “if it’s not grown, it’s mined”), but also because these resources have become powerful tools of geopolitical influence in one of the most economically uncertain periods yet.
As for this week’s discussions between the US and China in Switzerland, I’m looking forward to seeing whether they prompt China to adopt a more flexible stance on its rare earths export licensing regime to allow US firms to retain access. Without such flexibility many industries could face serious supply chain disruptions.
• Dr Baskaran, a development economist, is founding director of the Project on Critical Minerals Security at the Centre for Strategic & International Studies in Washington, DC.
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