China is the dominant supplier of materials that are vital for the production of electric vehicle batteries, solar panels, wind-turbine magnets and other low-carbon technologies.
Other nations need to challenge its lead if they are to compete effectively in these fast-growing industries. Those efforts took on greater urgency in 2025 after China started to curb exports of rare earths in response to US President Donald Trump’s trade tariffs.
The Trump administration has rolled out measures to build an alternative supply chain, investing directly in domestic miners and processors, extending finance to projects from Brazil to Australia and trying to build critical mineral alliances with other nations. And it’s planning a $12 billion fund aimed at creating a critical-mineral stockpile akin to the nation’s emergency oil reserve.
What are critical minerals?
Nations have long sought to secure supplies of materials they deem vital to their industrial and military capabilities. About 50 metallic elements and minerals have met those criteria in the US and the European Union, including lithium, graphite, cobalt, manganese and rare earths — elements with unique chemical behaviors that make them indispensable to the manufacture of some electrical, electronic, magnetic and optical products.
Most critical minerals were chosen for their role in building the infrastructure required to reduce the carbon emissions responsible for climate change, a mission that’s backed by hundreds of billions of dollars in subsidies and tax breaks. Some of the minerals are also used in semiconductors for civil and military communications
Why is sourcing critical minerals a challenge?
While many critical minerals can be found in a raw state in large quantities across the globe, extracting and refining them into a usable form can be technically complex, energy intensive and polluting. China has come to dominate the value chain for many of these products.
Even in the case of more abundant metals such as copper, massive demand growth means there might not be enough to go around. In 2023, the EU categorized copper and nickel as critical raw materials for the first time, even though there are lots of places where they can be found.
In rare earths, while China’s share of total supplies has come down in the past decade, it still has a stranglehold over the processing of these materials, especially the vital “heavy” rare earths that were put under export controls. Until 2025, it made almost all of the world’s rare-earth magnets.
Why is relying on China for critical minerals a problem for Western nations?
Manufacturers try to avoid overdependence on supplies from any single country because it leaves them exposed when that nation’s industrial output is disrupted by things like power shortages, epidemics or social unrest.
With China, there’s also the risk of supply interruptions due to economic rivalry or diplomatic disputes. President Xi Jinping successfully weaponized his nation’s grip on supplies of rare earths last year to bring Trump to trade negotiations that resulted in a one-year truce. That followed earlier restrictions on other niche but important materials including gallium, germanium, antimony, tungsten and graphite.
On April 4, 2025 — just days after Trump’s biggest trade offensive — Beijing put seven rare earths under export controls, causing panic among global manufacturers. As trade negotiations approached a climax, China unveiled plans for even stricter curbs, including a bid for “long-arm” jurisdiction over products traded worldwide containing even small amounts of materials of Chinese origin.
Under the one-year trade truce with Trump, Xi paused those “bazooka” measures and pledged to maintain adequate supplies of the other controlled minerals in return for Trump bringing down tariffs and easing restrictions on some Chinese companies. In January 2026, US Treasury Secretary Scott Bessent said rare earths were flowing ‘as expected’ under that agreement.
How did China get so dominant in critical minerals?
As early as 1992, Chinese leader Deng Xiaoping was highlighting his country’s potential to lead the world in critical minerals, saying “The Middle East has oil. China has rare earths.” As the country’s economic growth accelerated, demand for industrial commodities began to far outstrip local reserves.
The government responded with heavy investments in mining assets overseas and came to gradually dominate the refining and processing of many industrial commodities and a host of obscure byproducts. As China stepped in, Western companies withdrew, happy to outsource the production.
Today, China is the leading producer of 20 critical raw materials, as measured by its share of global mined or refined production. In the case of the rare earth element dysprosium, used in lighting and lasers, China is responsible for 84% of mined supply and 100% of refined production, according to an EU analysis.
The country is also the largest producer of refined forms of cobalt and nickel, and Chinese companies have been investing heavily in cobalt and nickel mines in nations such as Congo and Indonesia.
According to the White House, the US is “100% import-reliant” for at least 15 critical minerals and 70% of its rare-earth shipments come from China.
What are China’s economic rivals doing about it?
The pushback against Chinese dominance of critical mineral supply chains didn’t begin with the latest US-China trade spat. In fact, Japan moved more than a decade ago to reduce its reliance on Chinese rare earths after Beijing imposed an effective embargo on exports of the materials to its neighbor. Former US President Joe Biden’s signature Inflation Reduction Act also sought to ease economic dependence on foreign adversaries.
But Xi’s rare-earth move last year, coupled with Trump’s “America First” trade policy aimed at boosting US industry, have focused attention on risky supply-chain dependencies as never before.
MP Materials Corp., the only American mining company that’s producing rare earths at commercial scale, secured a landmark investment deal from the White House in 2025. That was followed by investments in Lithium Americas Corp., Vulcan Elements Inc., and backing for a new $7.4 billion zinc smelter making minor metals as by-products. This year, aspiring miner USA Rare Earth Inc. got $1.6 billion of funding.
Trump has held off on critical minerals tariffs while he pursues deals with other nations to secure long-term supplies and guard against low-price competition from China. In early February, the White House announced “Project Vault,” a $12 billion stockpiling program for critical minerals with pledges of participation from industrial giants including General Motors Co., Boeing Co and Google owner Alphabet Inc. as well as major trading houses.
Other governments are also taking some action, although none as extensive as the US. The European Union’s “RESourceEU” plan includes some €3 billion in spending this year to end dependence on Chinese raw materials, and the creation of a new body to oversee investments and build stockpiles. India has also launched a push to develop its own resources.
Will all these efforts pay off?
Trump’s trade advisor Peter Navarro has told Bloomberg that America will “quickly wipe away” Beijing’s materials monopolies. Industry experts say the reality will likely be more complicated.
Markets in some critical minerals are so small that it won’t take much new capacity to build up supplies and meet demand. Others are more complex. China’s near-total dominance in heavy rare earths and magnets is a challenge due to the relative lack of viable raw materials, processing capacity and established industrial expertise.
Customers outside China also have to be convinced that switching from decades of reliance on the Asian nation can be done seamlessly and at reasonable cost. Finally, China has a formidable foothold in many of the countries where supplies originate.
More than half of the cobalt mines in the Democratic Republic of the Congo are owned or controlled by Chinese companies, for example. And China gets almost all of its raw heavy rare earths from neighboring Myanmar, giving its magnet makers a major advantage in the race to secure supply chains.