Rare Earths: The New Flashpoint in the US-China Trade War

Rare Earths Latest News

Rare earth minerals, which are essential for contemporary technologies and defense systems, have become a new front in the continuing trade war between the US and China. The United States reacted sharply to China’s recent tightening of export restrictions on rare earths, threatening to impose high taxes. This evolution demonstrates how rare earths have evolved into a potent strategic tool in international trade.

• The most recent instrument of geopolitical competition is rare earths.
• Political and economic problems have been brought on by China’s export restrictions.

What are Rare Earths?

The 17 metallic elements that make up the rare earths include lanthanum, lutetium, scandium, and yttrium. These elements are found in very low quantities in nature, making them difficult to extract even though they are quite abundant. They are essential because to their special qualities, which include high conductivity, density, and thermal resistance. Smartphones, wind turbines, electric cars, medical equipment, and defense gear all employ them. However, extraction is expensive and environmentally problematic, which restricts production to a small number of nations.

• Defense and clean energy systems depend on rare earth elements.
• Because mining is costly and polluting, there are fewer producers worldwide.
  

China’s Dominance

China is now the world leader in rare earths, controlling 90% of the processing capacity and more than 60% of the mining. Because of its dominance, Beijing has considerable control over supply chains. In recent months, China has expanded its export control list to include additional heavy rare earth elements, including terbium, dysprosium, holmium, erbium, and ytterbium. Both defense and high-tech manufacturing depend on these. These regulations reflect China’s policy of using rare earths as a geopolitical influence instrument.

• China is where most of the world’s rare earth mining and processing occurs.
• The new restrictions are evidence of Beijing’s desire to weaponize commerce.

Impact on India

India’s reliance on rare earths from China is growing. China and Hong Kong supplied most of the 2,200 tonnes of rare earths that India purchased in 2023–2024. The two sectors most affected are electronics and electric cars. While India’s domestic production, driven by IREL Ltd., is small and only produces 10,000 tonnes a year, China has a capacity of over 200,000 tonnes. India has started to grow in an attempt to reduce dependency with initiatives like the Rare Earth Permanent Magnet Park in Visakhapatnam, the Rare Earth and Titanium Theme Park in Bhopal, and seabed mining projects in the Andaman Sea.

• China accounted for 65 percent of India’s imports of rare earth elements in 2023–2024.
• Projects in Visakhapatnam and Bhopal aim to boost domestic manufacturing.

Global Diversification Efforts

In an effort to reduce their reliance on China, other nations are also taking action. Deep-sea metals from the Pacific ocean floor are what the US plans to collect. Japan rebuilt its rare earth element supply chain after Chinese restrictions in the early 2010s, and it is now a model for other countries. Australia and the EU are investing in mining, alternative technologies, and recycling to ensure supply chain security.

• The United States and Japan are leading efforts to diversify their rare earth industries.
• Australia and the EU have made recycling and other sources a priority.

Conclusion

Rare earths are currently at the center of the US-China trade dispute. Because of their critical significance in clean energy and defense technology, they are more than just minerals; they are the cornerstone of the future economy. Even as China continues to dominate, India and other global powers are working hard to diversify their suppliers. India must increase output, uphold environmental safeguards, and establish strong international ties in order to guarantee long-term access to these essential resources.

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About the Author: Jyoti Verma