US-China critical minerals trade masks big strategic risks

US-China Critical minerals

The US-China critical minerals trade looks small in dollar terms but carries outsized strategic risks for key industries. The US-China critical minerals trade was worth just $2bn in 2024, only 3pc of US critical mineral imports. However, the US-China critical minerals trade underpins defence, high-tech manufacturing and energy systems that generate trillions in economic value.

Small trade volumes, large exposure to China

Macquarie research shows US critical mineral imports totalled $65bn in 2024 under the new 60-mineral list. Bulk materials like aluminium, copper and PGMs dominate the import bill and come mainly from partners such as Canada and Chile. By contrast, China supplied only $2bn, far below Canada’s $21bn or Chile’s $6.6bn.

However, China’s leverage rests in concentration, not value. It controls about 70pc of global rare earth mining and 90pc of processing. As a result, even small tonnages of Chinese exports can be mission-critical for US defence and advanced manufacturing. Any targeted export controls could therefore disrupt high-value supply chains well beyond the trade numbers.

Export controls could hit US GDP and strategic sectors

Macquarie estimates Chinese export controls on select minerals could each cut US GDP by more than $1bn in a year. Samarium restrictions show the highest impact, at an estimated $4.5bn loss, because of its critical role in defence. Meanwhile, curbs on lutetium could shave $2.1bn from GDP, mainly affecting refineries and semiconductor producers.

Controls on terbium, dysprosium and gallium would similarly reverberate across magnets, EV motors, wind turbines and high-frequency electronics. Therefore the economic risk from the US-China critical minerals trade lies in concentrated choke points, not headline trade flows. That reality is now shaping US industrial policy, stockpiling strategies and onshoring of processing capacity.

The Metalnomist Commentary

This analysis reinforces why Washington treats rare earths and related metals as strategic assets, not simple commodities. Even modest Chinese export controls could ripple through defence, semiconductor and energy transition value chains. Expect continued moves by the US and allies to diversify sourcing, build domestic refining and expand recycling to reduce this asymmetric exposure.