China has a powerful card to play in its fight against Trump’s trade war

Nectar Gan and John Liu

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Less than a year into Donald Trump’s first trade war with China, Chinese leader Xi Jinping made a high-profile visit to an unassuming factory in Ganzhou, an industrial city nestled among rolling hills in the country’s southeast.

Touring its exhibition hall in 2019, Xi examined row upon row of unremarkable gray metal blocks and declared to his entourage of Communist Party officials: “Rare earths are a vital strategic resource.”

Nearly six years on, China’s dominance of the rare earths supply chain has emerged as among its most potent tools in a renewed trade war with the United States president. The minerals – used to power everything from iPhones to electric vehicles – are vital components for the kinds of advanced technology that will define the future.

And unlike tariffs, it’s a front where Trump has little room to retaliate in kind.

Rare earths are a group of 17 elements that are more abundant than gold and can be found in many countries, including the United States. But they’re difficult, costly and environmentally polluting to extract and process.

For decades, the US and other countries have been dependent on Beijing’s supply of these processed metals. China accounts for 61% of global mined rare earth production, but its control over the processing stage is 92% of the global output, according to the International Energy Agency.