A New US-China Resource War

The April detente is reaching its end

Aug 26, 2025

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A destabilization of global resource markets is beginning as the US and China refuse to capitulate to one another. Ideas of a rapprochement, or trade breakthrough, are quickly fading, returning Washington and Beijing to the dangerous position they were in a few months ago in April.

China's latest move with rare earths signals that a new resource war is about to begin, threatening supply chains and the economic security of nations across the globe.

Every year, often twice (H1 and H2), Beijing sets ceilings that control production (including mining) and export of rare earths in and from China. This is referred to as the “rare earth quota system.” The measures were a multi-front strategy unveiled by China in the 20th century, as it quickly overtook the US as the leading exporter of rare earths. The plan was to raise prices (i.e., controlling production = less supply = higher prices) and, simultaneously, attract foreign investment (if businesses wanted more access to rare earths, instead of fighting for limited stock on global markets, they could establish operations within China itself).

Since its introduction in two phases (1998 and 2006), the quota system has been focused exclusively on rare earths mined and processed inside China.

But on August 22nd, all of this changed. The Chinese government suddenly expanded the parameters to include imports of rare earths, pushing global supply chains to the brink. The door is opening to a massive showdown between the world’s two largest economies that will make businesses and governments dizzy.