Will China Erase US Trade Dominance with Rare Commodity Exports?

In a decisive move shaking the foundations of global trade, China’s Ministry of Commerce recently issued Announcement No. 62 of 2025, signaling new restrictions on rare commodity exports. 

This policy intensifies Beijing’s control over critical minerals that power smartphones, electric vehicles, and even fighter jets, and directly challenges the US dollar-dominated trade system.

As tensions rise, analysts warn this could be the start of a new economic era, one where China’s commodity strategy may disrupt the long-standing US trade dominance.

China’s Strategic Grip on Rare Commodities

China has long been the world’s largest processor of rare earth minerals, controlling nearly 70% of global supply. These minerals are essential for high-tech manufacturing, including renewable energy infrastructure and advanced defense systems.

Under the new export rules, any foreign company dealing with materials containing rare earths must obtain Beijing’s approval and declare their intended use. This move strengthens China’s control over global commodity exports, effectively positioning it as a gatekeeper of industrial progress.

Experts describe this as “economic statecraft in action”, leveraging commodities not merely for profit but as a strategic instrument in international trade negotiations.

US Response: Tariffs, Retaliation, and Strategic Dilemmas

The United States swiftly reacted to China’s policy shift. President Donald Trump threatened to impose an additional 100% tariff on Chinese goods, accusing Beijing of weaponizing trade. Treasury Secretary Scott Bessent described the situation as “China versus the world,” emphasizing the potential risks to global supply chains.

Washington’s retaliation, however, exposes its dependency. Rare earths are crucial for American technology and defense industries, including the F-35 fighter jets, which require more than 400 kilograms of these materials each. Without Chinese imports, the US faces severe bottlenecks in key manufacturing sectors.

While US exports to China have declined amid tariff escalations, Beijing remains resilient. Analysts note that rare earths represent less than 0.1% of China’s GDP, small in economic weight but immense in strategic influence.

Global Impact: A Shift in Trade Power

China’s rare commodity restrictions ripple far beyond its borders. Countries like Australia and Japan are racing to establish alternative supply chains, but their infrastructure remains underdeveloped.

Beijing’s dominance is not accidental. Years of investment in research and talent have cemented its position as the world’s rare earth processing hub. This technological and logistical advantage allows China to dictate global supply trends and prices, reshaping international trade dynamics.

Meanwhile, global markets have reacted sharply, with commodity prices rising and investor confidence wavering. For many nations, the challenge now lies in balancing dependence on China’s exports with efforts to maintain economic sovereignty.

The Road Ahead: Cooperation or Confrontation?

Both powers appear to be recalibrating ahead of the next trade talks. Beijing insists its new measures are not punitive but regulatory, while the US frames them as aggressive economic warfare.

Experts believe China’s export strategy gives it the upper hand, a “bargaining chip” to secure favorable outcomes in negotiations. However, Washington still holds leverage through technology restrictions, particularly in high-end semiconductors and software.

The question remains: will this standoff lead to cooperation that redefines global trade, or a prolonged confrontation that fractures it further?

READ ALSO: Bitcoin Price Drops to $110K Amid U.S.-China Tensions

Conclusion

China’s rare commodity export restrictions are more than a trade policy, they are a statement of global power. By controlling access to critical materials, Beijing is challenging the US-led economic order and asserting dominance in international markets.

While the US dollar still anchors global trade, China’s ability to manipulate supply chains gives it unprecedented influence. Whether this leads to a balanced partnership or a deeper trade divide will depend on diplomacy, strategy, and the world’s ability to adapt to a new multipolar economic reality.

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FAQ

What are China’s rare commodities?

They are critical minerals, including rare earth elements, used in advanced technologies like EVs, solar panels, and military hardware.

Why is China restricting exports?

Beijing aims to tighten control over its strategic resources and gain leverage in international trade negotiations.

How will this affect the US?

The US heavily relies on Chinese imports for tech and defense manufacturing, which could face severe supply disruptions.

Can other countries replace China’s supply?

Alternatives exist, like Australia, but building large-scale processing infrastructure will take years.

Is a trade agreement still possible?

Yes. Despite rising tensions, both sides are expected to engage in talks, seeking stability and long-term cooperation.