How China’s Rare Earths Strategy Exposes Trump’s Achilles’ Heel

Last week, China’s Ministry of Commerce stirred things up with new rules on rare earth exports, shaking the trade peace with the U.S. This announcement, known as “announcement No. 62 of 2025,” puts tighter restrictions on these crucial minerals. Rare earths are vital for making everything from smartphones to advanced fighter jets.

China has almost all the control over rare earth processing globally. Under the new guidelines, companies outside China now need government permission to export items containing even a trace of rare earth elements and must disclose their intended use. In reaction, U.S. President Donald Trump has threatened to double tariffs on Chinese goods and limit software exports.

Scott Bessent, U.S. Treasury Secretary, called the situation a showdown between China and the world, emphasizing the deep impact on global supply chains. China responded, saying the U.S. misinterpreted the new restrictions, but added that compliant export applications would still get approval.

This recent escalation follows a brief calm after a truce was brokered earlier in May. Now, as the heads of China and the U.S. prepare to meet, experts believe China may hold the upper hand due to its control over rare earths. Naoise McDonagh, an international business lecturer, stated that these new restrictions would highlight weaknesses in the U.S. supply chains.

Rare earth elements are not just vital for electronics; they’re also crucial for green technology. For instance, one F-35 fighter jet requires over 400 kg of rare earth for its components. China accounts for about 70% of the global supply of these elements, significantly impacting electric vehicle production.

Interestingly, though China’s overall economy is huge—valued at $18.7 trillion—rare earth exports contribute a tiny fraction. Recent reports show a drop of over 30% in these exports compared to last year. Yet, experts believe this won’t significantly impact China’s economy. Professor Sophia Kalantzakos from New York University points out that while economically minor, rare earths carry significant strategic importance, giving China leverage in negotiations.

Even with threats of tariffs and export controls from the U.S., experts like Jiao Yang from Singapore Management University believe Washington still has options. Lowering tariffs could appeal to China, as its manufacturing sector struggles with decreased exports to the U.S., which have fallen by 27% year-on-year.

Washington could also threaten more trade restrictions against China’s tech sector, a tactic that has already included blocking high-end semiconductor purchases. However, analysts are skeptical about the long-term impact of such measures. For example, while these restrictions may slow down China’s growth, they won’t halt it completely.

China’s strategy shows it’s prepared to endure short-term pain for long-term gains. The ability to limit rare earth supplies puts tremendous pressure on industries worldwide, making this ongoing trade conflict crucial to watch.



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