As of this October, the global stage is witnessing a high-stakes showdown over rare earth elements (REEs). These are the critical minerals that power everything from smartphones to military hardware. China, which clearly dominates this domain, controlling over 90% of global processing, has turned REEs into a geopolitical weapon.
They have demonstrated this by severely restricting their exports to the US since April 2025 following tightened controls. Donald J Trump is of course trying to counter this with alliance, domestic initiatives, and a lot of posturing to his MAGA base, pretending “all is well”. But this kind of a stance by China raises questions, some of which do not look favourably at the US itself.
USA and China: Weaponizing Resources
The US set a precedent by weaponizing the dollar during the Ukraine conflict. They froze Russian reserves. And quickly moved to kick Russia out of the SWIFT system. Of course, the mainstream media downplayed this. But make no mistake; when history gets written many years from now, this one incident would be considered as the tipping point that ushered in the de-dollarisation era.
So now, if China weaponizes the REEs by halting supplies to coerce the USA, how wrong would that be? Definitely not enough for the same people, who damaged the fundamentals of the global financial system, to shout from their rooftops blaming China.
But is Beijing weaponizing in the true sense? Well, Dmitri Alperovitch notes, this is more of a breach of a summer 2025 trade truce promising export licenses. This behavoiur looks like a calculated retaliation to US tariffs and sanctions, and less a blanket weaponization of a near-exclusive resource.
And how did this “near-exclusivity” come to pass? Well, China’s leverage stems from its near monopoly, one that it built over decades. This now gives it a structural advantage that the West has so far failed to challenge meaningfully.
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This tit-for-tat escalation is a game that is nothing but both nations exploiting their strengths. Arnaud Bertrand highlights China’s narrative of responding to US “provocations” like sanctions on Chinese firms, framing REE restrictions as defensive. Meanwhile, the Chinese Embassy in India defends these moves as sovereign rights, not aggression.
The US, despite this recent drama, remains the clear offender in this game. It destabilised the sanctity of the linchpin of global trade, dollar. If others, like Russia with their energy, or Australia with their iron ore, follow suit, what stops the globe from spiralling into a series of fresh chaos?
And won’t it take a long time before the new rules of engagement get established, probably along the lines of different rival economic blocs? And what is the guarantee that the REE prices among others, would not surge amidst this fresh chaos? The moral high ground for Uncle Sam eroded just when Washington decided that it would be a great idea to weaponize the dollar; and that they were too big to bother about global trust anymore.
Shaky Patchworks
Trump’s strategy hinges on partnerships with Japan, Australia, and others to break China’s chokehold. A $13 billion US-Australia deal and a US-Japan agreement signed October 28, 2025, aim to secure non-Chinese REE supplies, with firms like Lynas ramping up capacity.
But here is the big question: Can the US be trusted? Especially with Donald Trump and his famous unpredictability (remember the Paris Climate Accord)? First Squawk reports market scepticism, with REE stocks volatile amid fears of Trump’s tariff flip-flops, not to mention his “America first” rhetoric, which would certainly alienate partners when benefits begin skewing towards the US.
And even then, there are two execution risks out there. One, high capital costs and strict environmental regulations in the US and allies make projects 2-3 times pricier than China’s. And two, the logistical nightmare, with Australian plants delayed and Myanmar’s chaotic mines clearly unreliable for sustained, serious operations.
But that is for the future. Presently, with the US still importing 100% of processed REEs and domestic output lagging, these so-called alliances are long shots. Analysts estimate 10-15 years to reach 20-30% self-sufficiency, assuming no political U-turns.
China weaponizes REE: The Broader Implications
This duel transcends economics; this could reshape global power dynamics.
China’s REE dominance, bolstered by its 69% mining share and vast reserves, gives Xi Jinping a “Sputnik moment” to flex geopolitical muscle. The US, with the world’s second-largest reserves, is playing catch-up, but its credibility deficit, exacerbated by Trump’s erratic style, undermines coalition trust. When deals falter, the US supply chains would paralyse.
At the other end, the weaponization debate reveals a deeper truth. Interdependence, which once used to be a stabilizer, is now a vulnerability. The dollar’s misuse has ushered in a world where no resource is sacred. That happened when Western self-righteousness decided that nothing, apart from what they wanted, was sacred enough.
Right now, for alliances to succeed, the onus is upon the US to prove its reliability. Which is impossible; not just because of Trump’s unpredictability, but because the USA is inherently unreliable. And with the likelihood of the US-led efforts stalling, China’s edge would persist. If Beijing succeeds, a bipolar resource map could emerge in the mid-future.
