US President Trump on Monday imposed a 25% tariff on imports from Japan and South Korea, while also announcing steep tariff rates for more than a dozen other countries. At the same time, he extended the deadline for implementing reciprocal tariffs on most trade partners until 1 August.
Unlike other countries, China was not granted a tariff delay until 1 August. Instead, it has until 12 August to reach an agreement or face further import restrictions. The average US tariff on Chinese goods now stands at 51.1%, while China’s duties on US exports average 32.6%. Beijing has labelled the tariffs “bullying,” vowing to defend its interests.
But as Washington attempts to reset its global trade strategy, experts say these measures cannot change a fundamental geopolitical reality: China continues to dominate the production, processing, and pricing of the critical minerals that power everything from electric vehicles to missile systems.
Minerals at the heart of the trade war
Much of Trump's global economic strategy now hinges on a critical battleground: minerals. These resources from rare earths to cobalt and lithium are essential to everything from smartphones and batteries to missile guidance systems and jet engines.
According to the South China Morning Post, the US relies on China for about 70% of its rare earth imports, making Beijing’s dominance in these materials one of its most potent forms of leverage.
Economist Wang Xiaosong from Renmin University told SCMP that the strategic importance of these materials likely played a decisive role in pushing Washington to agree to a temporary tariff rollback in early May.
China had retaliated to earlier US tariffs by placing more than a dozen strategic minerals under export control, effectively weaponising its dominance in the sector. “China will continue holding the cards for quite a while,” said analyst Vivek Y, as quoted by SCMP.
Despite US efforts to diversify including projects in Brazil, Kazakhstan, and Greenland the reality remains stark: China processes 90% of the world’s rare earths and controls nearly 70% of their production.
The price China still sets
Even as Trump declares a "national energy emergency" to ramp up domestic mining, China retains a crucial edge in price-setting power.
As The Atlantic reported, “When financiers determine the price for a ton of lithium, they turn to where those prices are set, which—thanks to China’s dominance—is typically in Asia.” In effect, even deals between companies in Texas and Quebec are often priced based on Chinese sales elsewhere.
While Trump’s administration has encouraged partnerships with friendly nations like Australia, Canada and Brazil, efforts to create an integrated, alternative market have been inconsistent. “We’ve pissed everyone off,” said analyst Datta to The Atlantic, referring to how several allies are now hedging away from the US due to erratic tariff and trade moves.
Meanwhile, China’s internal moves to expand mineral subsidies and exploration have only reinforced its long-term grip on the global market. At least half of China’s 34 provincial governments, including resource-rich Xinjiang, have increased mineral incentives, according to the Financial Times.
Not a complete win for China
Beijing’s export controls have not come without cost. As Times of India had earlier reported, the restrictions imposed in April in retaliation to US tariffs triggered a 75% plunge in Chinese rare earth magnet exports over two months. Global automakers were forced to pause production, and inventories piled up in Inner Mongolia’s Baotou exchange, which labelled the situation a “crisis”.
Still, despite revenue declines and layoffs among smaller Chinese producers, China’s strategic calculus remains intact. Analysts suggest Beijing might even welcome a consolidation of its fragmented magnet sector. “I do not know if Beijing sees that as a bad thing, because further consolidation is helpful for controlling and understanding where materials go,” said David Abraham, professor at Boise State University, to Reuters.
Ellie Saklatvala of Argus noted that “they have temporarily lost an important part of their customer base, with no certainty about when they will regain it.”
Deals, diplomacy, and control
In one of the more geopolitically significant moves, the Trump administration recently helped broker a peace agreement between the Democratic Republic of Congo and Rwanda. While couched in diplomatic language, The Atlantic Council’s Tressa Guenov noted that “the deal hinges on what is by now a familiar theme with the Trump administration: access to critical minerals.”
The DRC is a major source of tantalum, tungsten and coltan minerals vital to defence and tech industries and an area where China already holds major stakes. Any renewed US involvement will inevitably face competition, not just from Beijing but also from Russia, which has long sought influence in the region.
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