China Leveraged Its Mineral Dominance to Shift U.S. Trade Policy — and Where Pakistan Fits In
From Sublime to Selfie
In the chessboard of geopolitics, natural resources have often proved more decisive than diplomacy. While oil was the defining strategic commodity of the 20th century, driving geopolitical alliances, conflicts, and economic growth, rare earth elements (REEs) are becoming the critical enablers of the 21st century’s technological, energy, and defense eco-systems — reshaping the foundations of global power and economic competitiveness.
By April 2025, as trade tensions between the United States and China intensified for a second time, China’s dominance over the rare earths sector had evolved into a critical strategic asset — compelling Washington to reassess and temper its aggressive economic policies. Built through decades of calculated industrial policy, China’s rare earth supremacy has transformed critical minerals into instruments of geopolitical leverage. As the global order shifts, Pakistan, with its newly unveiled mineral development strategy, is emerging as a potential new player poised to capitalize on the growing demand for diversi-fied and secure mineral supply chains.
Rare earth elements — a group of 17 metallic elements such as neodymium, dysprosium, and terbium — are essential ingredients in the global technological economy. They power electric vehicles, smartphones, wind turbines, semi-conductors, and advanced weaponry.
Yet their story is not simply about geological abundance; it is about industrial mastery. Extracting and refining REEs requires complex, expensive, and environmentally damaging processes — areas where China decided to specialize early and aggressively.
China’s Monopoly
In the 1990s and early 2000s, as stricter environmental regulations shuttered U.S. rare earth mines, China seized the opportunity by flooding global markets with low-cost REEs, forcing international competitors out. This was a deliberate strategy, not market coincidence. Through aggressive subsidies, export controls, and strategic stockpiling, China secured control over 60–70% of global mining output and over 85% of refining capacity. Deng Xiaoping’s 1992 proclamation — “The Middle East has oil; China has rare earths” — crystallized into national policy, shaping decades of focused investment that transformed China’s rare earth sector into a powerful tool of economic and geopolitical influence.
2025- Trade Wars for the Critical Minerals
The second Trump administration’s decision in early 2025 to impose a sweeping 145% tariff on Chinese imports was intended to maximize pressure on Beijing and force strategic concessions. Instead, it ignited a deeper crisis — one that exposed the fragility of global supply chains. Rather than responding with blanket counter-tariffs, China executed a far more precise and devastating manoeuvre: it tightened export controls on critical heavy rare earth elements, including dysprosium and terbium, metals essential for high-performance magnets used across advanced industries. The disruption was immediate and far-reaching. Tesla’s production of its Optimus humanoid robots stalled, defense contractors warned of critical vulnerabilities in weapons manufacturing, and healthcare providers faced looming shortages of essential medical technologies such as MRI machines and radiotherapy equipment. China’s calibrated weaponization of rare earths demonstrated a new strategic reality: in the 21st century, control over supply chains can achieve what conventional military power once did — bending adversaries without a single shot fired.
Lessons from the Past
The rare earth gambit of 2025 fits a well-established pattern of resource weaponization. In 1973, OPEC’s oil embargo reshaped global geopolitics by turning energy dependence into strategic leverage. In 2010, China briefly restricted rare earth exports to Japan after a maritime dispute, crippling Japan’s technology sector and exposing vulnerabilities in global supply chains. But the 2025 manoeuvre was subtler and more calculated. Instead of imposing a direct ban, China introduced export licensing requirements, carefully avoiding explicit breaches of World Trade Organization (WTO) rules. It was a strategic exercise in legal warfare — achieving maximum geopolitical pressure while minimizing legal exposure.
The American Response
For the United States, the message was unmistakable: economic coercion in the age of critical minerals demanded a faster, more resilient response. By late April 2025, facing pressure from industry and national security circles, Washington softened its stance. Treasury Secretary Scott Bessent publicly called for de-escalation, acknowledging that the economic and strategic costs of prolonged confrontation were unsustainable. In parallel, the U.S. accelerated efforts to reopen domestic mines like Mountain Pass, pursued diversification agreements with Australia, Canada, and Greenland, and ramped up investment in rare earth recycling technologies. Still, structural vulnerabilities remained: achieving true independence from Chinese refining capacity could take another eight to twelve years. The emerging reality was clear — in the new era of geopolitical competition, industrial strength would depend as much on securing critical minerals as on technological innovation or financial prowess.
Pakistan’s Moment:
Stepping Onto the Global Minerals Stage
As major powers scrambled to secure alternative supply chains, emerging resource states like Pakistan saw an opportunity to reposition themselves within the new critical minerals economy. Amid this global scramble, Pakistan has quietly begun to assert itself as a potential new player in the rare earths arena. At the Pakistan Minerals Investment Forum 2025 (PMIF25) held in Islamabad, the government unveiled an ambitious blueprint aimed at unlocking the country’s vast, underexplored mineral wealth — estimated to exceed $6 trillion, spanning copper, gold, lithium, and potential rare earth deposits concentrated in Baluchistan, and Gilgit-Baltistan.
Central to this new strategy is the launch of the National Minerals Harmonization Framework 2025, an initiative designed to streamline mining regulations, simplify investment procedures, and create a more stable and predictable environment for both domestic and international stakeholders. The move signals Islamabad’s intent to shift from an ad hoc resource economy to a structured, globally competitive mining sector.
Strategically, Pakistan possesses distinct advantages. Geographically, it sits at the crossroads of China, Central Asia, the Gulf, and South Asia — offering a natural conduit for mineral trade routes. Its resource base, while still underexplored relative to its potential, includes significant reserves of critical minerals increasingly coveted by global markets. Politically, Pakistan’s tradition of maintaining diplomatic flexibility — engaging with both Western and Eastern blocs — positions it uniquely to attract a broad spectrum of strategic partnerships at a time when diversification away from China has become a global priority.
If leveraged wisely, Pakistan could emerge as a critical minerals alternative — precisely the kind of supplier the United States, Japan, Europe, and Australia are urgently seeking in their efforts to “de-risk” and secure non-Chinese supply chains. However, the opportunity is not without risks. Persistent security challenges, particularly in mineral-rich regions like Baluchistan, remain a concern.
Governance will be critical; transparent and enforceable regulatory frameworks must be established to avoid the pitfalls of past resource booms. Equally, Pakistan will need to invest heavily in infrastructure — from modernized ports and transportation networks to domestic refining and processing capacities — if it is to move beyond merely exporting raw materials to capturing higher-value stages of the mineral supply chain.
The race is on. Pakistan, if it acts decisively and strategically, could transform from a peripheral frontier market into a pivotal actor in the emerging architecture of the global minerals economy — reshaping not just its own economic future, but its geopolitical standing in a rapidly changing world.
Why This Moment Matters Globally — and for Pakistan
The rare earths saga has made one fact unmistakable that the control over critical minerals now shapes the future of energy, defense, and technology. For Pakistan, the stakes could not be higher. Developing its mineral wealth offers a path to economic revival, particularly in regions like Baluchistan and Gilgit-Baltistan, where resource-driven growth could reshape local economies and national fortunes. It also opens the door to greater geopolitical relevance, securing Pakistan a role in the emerging architecture of global supply chains.
With diplomatic agility, Pakistan could attract Western, Chinese, and Gulf investments alike — maintaining strategic leverage without over-dependence on any single partner. Yet time is short. The decisions made over the next two to five years will not merely impact economic outcomes; they will define Pakistan’s position in a rapidly evolving global order for decades to come.
The Future in Hand
The rare earth confrontation of 2025 laid bare the underlying structure of modern power, revealing that true influence in the 21st century stems not from open confrontation but from strategic control—particularly of supply chains and critical materials. Now, Pakistan faces a defining moment—one that demands foresight, agility, and bold action.
