Authors: Andrea Little Limbago and Mackenzie Clark
In July 2018, the US imposed a 25% tariff on over $30B worth of Chinese imports. Growing concern over Chinese trade practices sparked the introduction of tariffs largely targeting those highlighted in China’s ‘Made in China 2025’ strategy. Immediately in response, China retaliated with tariffs on over $30B worth of US goods. Since that time, hundreds of products have been subject to the ongoing, tit-for-tat retaliation between the two countries. However, this time is different.
Yesterday, China introduced the most expansive export controls to date that target a range of raw materials. These controls represent a marked escalation in the global trade war, an escalation that jeopardizes the high-tech products that drive the global economy and national security.
A Very Short-Lived Detente
This latest flare up is part of the constant drumbeat of tariffs, restrictions, and banned lists have defined the current era of economic warfare. However, there were signs of an economic warfare detente earlier this summer when the acceleration of retaliatory export controls and tariffs ended in August with both parties agreeing to a 90-day pause in retaliatory tariffs to buy time for talks. In fact, the executive order at the end of September paved the way for eliminating the proposed TikTok ban, and opened the door to a meeting between the two presidents in South Korea later this month.
This all came crashing down with China’s announcement. Yesterday, China’s Commerce Ministry declared any products made with specific rare-earth minerals orginating from China – and account for 0.1% or more of the good’s value – must receive approval from Beijing. This announcement added to existing export controls on rare-earth minerals, bringing the total to 12 of 17 rare-earth minerals now restricted by China. Some come into effect immediately, others on December 1.
These rare-earth minerals are a critical point of leverage, as China dominates market share, accounting for 70% of rare earth mining and over 90% of separation processing and magnet manufacturing. All of these are critical to national and economic security. From weapons systems and fighter jets to semiconductor manufacturing and memory chips, virtually no advanced technology is immune to disruption.
As of Friday afternoon, US President Donald Trump threatened to cancel the upcoming meeting with Chinese President Xi Jinping, and impose new tariffs on Chinese exports as economic retaliation. Was this China’s response to last week’s US Department of Commerce expansion of two banned lists to include subsidiaries which added almost 3,000 new companies and targeted China’s tech sector? Or was the easing of tensions nothing more than China buying time before sending shock waves across the global economy? Regardless of the timing, both rhetoric and policies are heating up, with China flaunting its supplier dominance, and the US its buyer dominance.
Assessing the Global Impact
interos.ai analyzed the extended supply chain implications of the tightening of rare earths and critical mineral exports from China. This analysis identified over 11,000 companies in China that supply minerals that have been identified as at-risk by the U.S. Geological Survey.
Since 2024, over 16,000 companies have been directly supplied by a Chinese exporter of rare earths or critical minerals. When expanding this analysis to include indirect buyers in Tier 2 and Tier 3 that rely on these minerals as inputs to components and finished goods, the blast radius expands to over 1.2 million companies worldwide.
The geographic impact of these new export policies disproportionaly effects companies in the United States, with interos.ai insights showing 38% of direct and indirect buyers of at-risk Chinese products located in the country. Other major importers include India, which represents about 7% of importing companies, and the United Kingdom, which represents another 6%.
Despite most of the impact being concentrated in the United States, virtually all countries could be impacted by a constricted supply of rare earths. Over 220 countries were identified in interos.ai’s extended supply chain risk assessment, with major industries such as software, consumer goods, engineering, and industrial equipment manufacturing among the most impacted industries.
Moreover, given the nature of complex, hyperspecialized supply chains, the dependencies and impact of China’s “0.1% rule”, these numbers exponentially increase when going out to the nth-tier, where many of these risks are hidden.
The Real Start of Economic Warfare
Retaliatory economic statecraft has been omnipresent since 2018, with a growing recognition that we have entered a new era of economic warfare. However, we may one day look back at the time before China’s latest announcement as mundane compared to what is to come. Strategic steps are already underway to minimize China’s leverage over this critical minerals, including public-private partnerships between the government and MP Materials, Intel, and others, to accelerate rare earth magnet and semiconductor autonomy. The US CHIPS and Science Act also targeted greater technology supply chain independence and domestic production.
Similarly, companies must take steps now to minimize dependencies and anticipate how these policies will impact their supply chains. Companies that can track material exposure are better positioned to anticipate and mitigate disruptions, even as market dynamics and geo-economic competition wade into unchartered territory. As export controls tighten, supply chain resilience increasingly depends on seeing risks at the intersection of geopolitics and rare earth materials by:
- Identifying which products or components contain exposed materials.
- Anticipating potential bottlenecks before they disrupt production.
- Assessing how regulatory changes, licensing requirements, or geopolitical shifts may cascade throughout your portfolio.
This latest export shock obliterates any progress toward an economic truce, and instead puts the world on alert for greater volatility and disruption. China’s “trade hostility” has already caused stock selloffs in anticipation of significant escalation. The Dow dropped 500 points, while both the S&P and Nasdaq also saw some of the biggest losses of the year. New port fees, antitrust investigations, and additional export controls beyond rare earth minerals are just a few aspects of the elevating threats between the two countries. interos.ai will continue to closely track these and all supply chain events, anticipating a ratcheting of tensions and uncertainty that will leave no industry or company untouched.
Speak with one of our supply chain experts to help uncover hidden dependencies in your product lines.