China's dominance in rare earths is a game-changer, and a former White House advisor is sounding the alarm.
Imagine a world where a single country holds the key to modern technology, and no one can access it. That's the reality we're facing, according to Dean Ball, a former senior advisor at the White House Office of Science and Technology Policy.
China's recent export controls on rare earths are more than just a trade restriction. Starting December 1st, foreign companies need a license to export products containing even a tiny fraction (0.1%) of Chinese rare earths or those made with Chinese production technology.
President Trump's response was swift: a 100% tariff on China and limits on US software exports. But this is about more than a trade war; it's about the very foundation of our modern economy.
"China has crafted a policy that gives it the power to forbid any country from participating in the modern economy," Ball wrote. And here's where it gets controversial: China achieved this by building an industrial capacity that no other nation was willing to match, tolerating financial and environmental costs that others shied away from.
China's stranglehold on rare earths is staggering: they produce over 90% of the world's processed rare earths and rare earth magnets, used across industries from tech to automotive and defense.
The impact is real: US car companies have had to curb production due to rare earth shortages, as China leverages its supply to counter Trump's tariffs.
While talks between Washington and Beijing have eased access somewhat, trade tensions remain high. For instance, the US has restricted other countries' exports of semiconductor-related products to China, and this week, port fees on Chinese ships were announced, prompting Beijing to retaliate with similar fees on US ships. China also launched an antitrust investigation into US chipmaker Qualcomm.
Michael Froman, president of the Council on Foreign Relations, puts it bluntly: "The US can cut China off from today's chips, but China can make it vastly harder to build tomorrow's advanced technologies."
Economist Robin Brooks offers a different perspective. He argues that while markets expect Trump's China tariff threat to backfire on the US, China's exporters are suffering significant profit drops due to these tariffs.
"China may be using rare earths to escalate the stand-off with the US because it has no other choice," Brooks explains. "The hit to its export sector is just too considerable, making it necessary to raise the stakes in an effort to bring US tariffs down."
Beijing remains defiant, stating that while they don't want a tariff war, they're not afraid of one either. They view the export controls as a sovereign right, not a ban.
Former advisor Ball sees an opportunity in China's strict controls: a chance for the world to build a new, resilient supply chain that can't be weaponized by any single country.
"Supply is elastic," he adds. "If our lives depend on it, we can overcome challenges faster than the policy planners in Beijing, Brussels, and Washington realize."
The question remains: Can the world find a way to break free from China's rare earth dominance, or will we continue to dance to their tune? What do you think? Share your thoughts in the comments below!
