A test of metal: China’s rare-earth leverage looms over Trump-Xi talks

The recent meeting between US President Donald Trump and Chinese President Xi Jinping is of significant importance due to China's dominance in the rare earths industry. Rare earths are critical minerals used in various advanced technologies, including electric vehicles, power grids, and defense production. China, which holds approximately 44 million tonnes of rare earth reserves, wields substantial economic leverage over the US and its allies.

During their last meeting in April, Beijing enforced strict controls on certain rare earths and magnets, followed by additional curbs that disrupted global supply chains. Analysts warn that China's ability to throttle production and restrict exports poses a significant challenge for alternative supply chains, which take years to develop and are costly to establish.

In response to China's actions, the US has threatened additional tariffs, technology controls, and increased investment in its own industry. However, experts emphasize that these measures cannot quickly replace Chinese supply. The Council on Foreign Relations even labeled rare earths as China's "supply chain weapon".

Other countries, such as Saudi Arabia and the United Arab Emirates, are also seeking to diversify their mineral wealth and reduce dependence on Chinese processing. However, the US and its allies must approach negotiations cautiously, as China may respond asymmetrically, such as by reducing critical mineral exports.