When President Donald Trump met China’s leader Xi Jinping in Beijing in May, an economic chokepoint hovered over their negotiations: critical minerals. The global economy was already roiled by the de facto closure of the Strait of Hormuz, which has blocked nearly 20% of the world’s energy supply. And after the meeting, the White House published a fact sheet heralding a new “constructive relationship of strategic stability” between the world’s two largest economies, signalling a new détente.

The year leading up to that moment had been particularly volatile. On Apr. 2, 2025, President Trump announced global tariffs, with the highest rates against China, which faced a 145% tariff and responded with its own 125% tariff on American goods. Shortly after, China introduced export controls on rare earths, a subset of critical minerals that are vital for industries ranging from defense to green energy, and whose downstream processing and production the country dominates. Within a month, shipments of rare earth magnets from China dropped by 74% year-on-year, and automakers in the United States, Japan, and Europe, dependent on these inputs, slowed or, in some cases, closed production.

Rounds of negotiations between the US and China followed. In October, China expanded its export controls on rare earths further and with new tools. The new Beijing rules mirrored the foreign direct product rule—which Washington has used to block semiconductor-related exports to China from third countries—and required foreign businesses to seek approval from Beijing before exporting magnets containing even traces of rare earth materials sourced from China or produced using Chinese techniques or technology.

Later that fall, President Trump met Xi in South Korea, setting the stage for their Beijing summit. But statements about stability that came out of that meeting don’t mean stasis. In fact, the equations behind this long-standing economic contest between the US and China may be rebalancing, albeit slowly, and with long time horizons still ahead. That’s because, in the leadup to and following the Beijing summit in May, a wave of private and public investments, offtake agreements, international commitments, and pushes for stockpiling and industrialization of critical minerals supply chains through new mines and new production facilities have begun to move the market.

This current phase of American, and indeed global, economic statecraft is defined by a dual imperative: biding time and building resilience and capacity, with more diverse and robust supplies of the resources that underpin so much of the global economy, and national security.

Reshaping the critical minerals competition

Beijing did not come to dominate the critical minerals market overnight. “The Middle East has oil. China has rare earth metals,” Deng Xiaoping, the leader of China’s economic reforms, is believed to have said in 1992. Even that statement may understate the degree of market concentration seen today. During the Arab oil embargo, the Organization of the Petroleum Exporting Countries accounted for slightly over 50% of global crude oil production, a figure that has since fallen to below 35%. China, by contrast, now leads production for 30 of the 44 critical minerals for which there are reliable estimates, commands an average market share of over 70% for strategic minerals, and accounts for 93% of magnet manufacturing.

The critical minerals standoff between Washington and Beijing last year was novel, but not unprecedented. In 2010, Beijing embargoed rare earths exports to Tokyo as a result of a dispute with Japan. In 2020, China reportedly cut off exports of graphite to Sweden. Indeed, last year’s measures added to a litany of resource nationalism: globally, restrictions on critical minerals have risen five fold since 2009. Despite the high levels of concentration in this market there is, however, no monopoly on the sources of rare earths: Australia, Brazil, Canada, Greenland, Indonesia, Kazakhstan, Ukraine, the US, and Russia all possess substantial mineral deposits, as do many other countries and territories. The landscape changes when we consider the capacity for rare earth purification, synthesis or fabrication, and manufacturing assembly. This is where China has unmatched capacity and a strategy to hold it. As the Department of Defense has noted, Chinese firms, willing to operate at losses, have “strategically flood[ed] the global market” with rare earth elements to decrease competition.

But China’s long-term dominance of critical minerals is far from settled. New deposits of minerals are being discovered with increasing frequency around the world. Global rare earth mine production has more than tripled........

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