China Weaponizes Rare Earths in Global Tech Power Play

Beijing has escalated its control over rare earth elements, critical for computer chips, electric vehicles, and defense technologies, intensifying already fraught U.S.–China tensions. 

The latest export restrictions target strategic metals like dysprosium, used in high-temperature magnets essential for advanced semiconductors. While claims that China refines 99% of global dysprosium are exaggerated, the country still processes nearly all ultrapure variants for chips, dominates over 90% of global refining, and contributes roughly 60% of global production. This dominance gives China enormous leverage over the global tech supply chain.

In response, President Donald Trump imposed 100% tariffs on Chinese imports and expanded export controls on key software, stoking fears of a full-scale trade war. 

The move sent shockwaves through global markets: the S&P 500 and Nasdaq recorded their steepest one-day declines since April, erasing over $2 trillion in value. Tech giants Nvidia, AMD, Apple, and Tesla fell between 3–8%, as investors scrambled amid mounting uncertainty.

China condemned Washington’s retaliation as “hypocritical double standards,” vowing to remain resilient and leverage its rare earth supremacy. The U.S., meanwhile, accused Beijing of “holding the world hostage,” calling the new export curbs a threat to global security.

With China now requiring special licenses for exports containing even trace amounts of rare earths, the confrontation risks disrupting supply chains, fueling inflation, and derailing a planned Trump–Xi summit. As both economies falter under pressure, experts warn that only urgent diplomacy can prevent a deeper rupture in global trade and technology ecosystems.