US Treasury Secretary Scott Bessent has sharply criticised China’s rare-earth
export restrictions as a “real mistake,” highlighting its negative global
economic impact and Beijing’s readiness to weaponise these critical minerals.
Following intense US-China trade tensions, discussions at the recent APEC
summit led China to suspend some of these curbs for a year, signalling a
temporary easing in the conflict.
China’s Rare Earth Export Restrictions and the Global Impact
As reported by journalists at LiveMint and
the Financial Times, US Treasury Secretary Scott Bessent described
China’s decision to tighten control over rare earth exports in October 2025 as
a “real mistake” that alarmed global markets. These restrictions targeted materials
vital to defence systems, electric vehicles, and consumer electronics, thereby
disrupting highly interdependent global supply chains. Bessent said this move
exposed China's willingness to "weaponise" these minerals,
underlining the global economic risks involved.
“China has alerted everyone to the danger. They've made a real mistake,”
said Bessent in an interview with the Financial Times. He clarified,
“It's one thing to put the gun on the table. It's another to fire shots in the air.”
Bessent emphasised that the US and China had reached a
fragile “equilibrium,” but Beijing’s attempt to leverage rare earth dominance
as a coercive tool had strongly backfired, undermining China’s previous
position of control.
Strategic Importance of Rare Earth Minerals
China holds a near-monopoly in the production and processing
of rare earth elements, controlling approximately 61% of global production and
92% of processing capacity according to the International Energy Agency. These
minerals are indispensable for manufacturing critical technologies, from
smartphones and electric vehicles to fighter jets and missile systems. The
scarcity of alternative suppliers outside China has left other nations,
especially the US, vulnerable to supply disruptions.
As highlighted in a BBC report, China’s
export restrictions required foreign companies to apply for government approval
even when exporting products containing minimal rare earth content, signalling
a deepening strategic control by Beijing. The new curbs followed a series of escalating
trade measures and tariff impositions by the US.
US-China Trade Tensions and Diplomatic Responses
The rare earth restrictions became a flashpoint amid
widening US-China trade friction. President Donald Trump, meeting with Chinese
President Xi Jinping at the APEC summit in South Korea, discussed the issue
along with a broader trade agenda. Following these talks, China announced a
one-year suspension of certain export curbs, including those on rare earth
materials — a move welcomed by US officials.
US Trade Representative Jamieson Greer noted that trade
talks were “moving toward agreement,” and described China’s attempt to exert economic
control globally as opportunistic but somewhat mitigated by negotiations. Greer
said the US had pledged tariff reductions provided China allowed rare earths to
flow freely, underscoring the deal’s conditional nature.
Industry and Economic Implications
Industry reactions reveal urgent efforts to diversify supply
chains and reduce reliance on Chinese rare earths. Bloomberg reported
that US companies like Noveon Magnetics Inc. are ramping up domestic production
of rare-earth magnets, a critical component for many technologies, amid fears
of ongoing supply instability.
Noveon’s co-founder Scott Dunn said the company was scaling
up production faster than planned, with deals secured with major players such
as General Motors and ABB Ltd. This industrial pivot reflects a broader
geopolitical determination by the US and its allies to build resilient rare
earth supply chains outside China.
Analysis of Policy Dynamics and Future Outlook
According to the New York Times, China’s initial
restrictions can be seen as a reaction to US technology export controls,
reflecting an evolving global licensing and trade control battle. Experts
criticised the Trump administration’s inconsistent approach, which some argue
allowed China to solidify its strategy of dominant control over rare earths and
to test Washington’s responses.
The National Security Council’s diminished influence within
the US government appears to have contributed to coordination challenges in
shaping a coherent China policy. As trade confrontations persist, both sides
have employed retaliatory measures, with rare earths being a key battleground
symbolising deeper geopolitical fault lines.
Summary of Official Statements
Scott Bessent, US Treasury Secretary, to Financial Times:
“China has alerted everyone to the danger. They've made a real mistake…it’s one thing to put the gun on the table, it’s another to fire shots in the air.”
Jamieson
Greer, US Trade Representative, to Reuters: Trade talks were
progressing with a “very productive meeting” expected between Presidents
Trump and Xi, with rare earths on the agenda.
Chinese
Ministry of Commerce spokesperson, via BBC: Responded to US
trade measures as “suppression” of China and defended China’s moves as
necessary in the face of US restrictions.
Scott
Dunn, co-founder of Noveon Magnetics (reported by Bloomberg):
US industry is rapidly expanding rare earth magnet production to reduce
China dependency.
The rare earth export curbs imposed by China have significantly escalated US-China trade tensions, disrupting global supply chains and triggering industrial realignments. US Treasury Secretary Scott Bessent’s condemnation as a “real mistake” underscores the geopolitical and economic stakes involved. While recent diplomatic efforts, including the APEC summit talks, have temporarily eased these tensions with a suspension of some curbs, the episode has exposed vulnerabilities and the limits of China’s leverage over critical minerals.