The Rare Earths Chokepoint The accelerating global shift toward clean energy and advanced technologies is redefining global economic power, making critical minerals—especially rare earths—a crucial geopolitical flashpoint. Though small in trade value, rare earths hold immense strategic impact, acting as chokepoints for sectors including electric vehicles, wind power, AI, and defense.

China has spent decades building a near-monopoly, dominating nearly every stage of the value chain, from mining to processing (accounting for 87%-92%) and permanent magnet manufacturing (94%). This control provides Beijing significant leverage over global technology supply chains. We discuss China’s strategic use of the "0.1 percent rule," which requires Chinese government approval for exports containing even small amounts of rare earths, potentially influencing high-tech products worth hundreds of billions.

The US is heavily exposed, relying on China for up to 70% of its rare earth compounds and metals, threatening its defense industry (e.g., F-35 jets and missiles) and manufacturing. This episode analyzes the fragile one-year rare earth trade truce struck between US President Trump and China’s President Xi Jinping, which temporarily postponed China’s export controls. We examine what it means to operate in this new era of strategic interdependence and why building resilience through diversification and innovation is now essential for technological sovereignty.

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This episode includes AI-generated content.