Tension in Europe due to China-US conflict: Concerns about China potentially grabbing scarce mineral resources
In the ever-evolving landscape of modern technology, the significance of rare earth minerals (REE) cannot be overstated. These elements are indispensable for high-tech industries, defense manufacturing, and renewable energy technologies [1][2]. As of mid-2025, China dominates the REE market, controlling the majority of global production, processing, and export [1][2].
This dominance has taken on a new dimension with the escalation of trade tensions between China and the United States. In a strategic move, China has imposed an export ban on refined rare earth alloys, magnets, and chemical mixtures, effective from July 1, 2025 [2]. These refined products are integral components in electric vehicles, wind turbines, aerospace, semiconductor manufacturing, and medical imaging devices.
The consequences of China’s export restrictions are far-reaching. Manufacturing supply chains in key economies such as the U.S., Germany, and India are at risk, with production slowdowns and component shortages a real possibility if alternative supplies are not found promptly [2].
Moreover, the situation has heightened geopolitical and economic risks. Countries and companies are now urgently seeking to diversify their sources or develop domestic refining capabilities to reduce dependence on China’s REE supply chain [1]. This includes renewed investments in mining outside China and efforts to build independent processing infrastructure.
Beyond rare earths, China also exerts control over other critical minerals like gallium, essential for advanced defense systems. China’s near monopoly on gallium allows it to influence a smaller but strategically critical market, further embedding security risks for U.S. and allied defense supply chains [3].
The ongoing trade dispute between China and the United States is causing concern among European leaders, who are grappling with balancing economic interests and national security considerations [4]. The situation has forced industries dependent on advanced materials to reassess and often reconfigure their supply chains.
In conclusion, China’s dominance in the rare earth minerals market and recent export restrictions have intensified global supply chain vulnerabilities and geopolitical tensions. The situation demands a reevaluation of supply chains and a renewed focus on diversifying sources and developing domestic capabilities to reduce dependence on China's REE supply chain. [1][2][3]
- The escalation of trade tensions between China and the United States, coupled with China's export ban on rare earth alloys, magnets, and chemical mixtures, has politicized the technology sector, as industries heavily reliant on these materials now face supply chain disruptions.
- As a result of China's control over the rare earth minerals market and critical minerals like gallium, nations are increasingly focusing on diversifying their sources or developing domestic refining capabilities, as the reliance on China's supply chain for advanced technology and defense systems poses significant geopolitical risks.