US threatens new tariffs if China blocks rare earth exports

China’s recent move to tighten controls on rare-earth exports has triggered alarm across global markets over dependence on Beijing, US Treasury Secretary Scott Bessent said today. The statement described the export curbs as a strategic miscalculation that has pushed nations to accelerate efforts to diversify supply chains.

Bessent said, “China has alerted everyone to the danger. They’ve made a real mistake. It’s one thing to put the gun on the table. It’s another to fire shots in the air.” The remarks, first made in an interview with the *Financial Times*, were widely circulated by global wire agencies and Indian outlets.

Push to reduce Chinese dominance

Washington believes China’s leverage over the global supply of rare earths will weaken within the next two years. The Treasury Secretary said allied efforts to secure alternative sources were advancing at “warp speed”, with new projects in processing and refining underway across several partner nations.

Plans being discussed include coordinated investment in mining and refining outside China, along with the creation of stockpiles of critical minerals used in electric vehicles, defence equipment and consumer electronics. Trade negotiators have also considered tariff hikes if China reinstates export curbs.

A high-level meeting between US President Donald Trump and Chinese President Xi Jinping at the APEC summit produced a temporary truce, with Beijing agreeing to suspend parts of its new export regime. Washington, in turn, delayed a fresh round of tariffs, buying time for both sides to ease tensions while new supply routes are explored.

Industry groups point out that China still accounts for about 90 per cent of global rare-earth processing, even when mining occurs elsewhere. Building processing capacity in other countries remains technically demanding and requires large-scale investment and environmental clearances.

India’s role in alternative supply chains

Allied democracies across Asia and the West are expected to join the American initiative. “All the Western democracies, the Asian democracies, and India are also going to join us in this, in trying to form our own supply chains,” Bessent said. “We don’t want to decouple from China, but we need to de-risk — they’ve shown themselves to be an unreliable partner in many areas.”

Indian participation is seen as crucial to developing a parallel supply network. New Delhi has already signalled readiness to collaborate on critical mineral extraction, processing and technology transfer with the United States, Japan and Australia under the QUAD framework.

Market analysts said Bessent’s comments reflected growing political urgency to reduce strategic dependence on Beijing for essential inputs. Moves to expand domestic production and diversify sources have become central to economic security strategies among major economies.

China’s restrictions, announced in October, had sent shockwaves through global manufacturing sectors before the pause in implementation. The US Treasury now expects the alliance-driven diversification to erode China’s dominance within two years.

Direct quotations in this report reproduce the wording used in the *Financial Times* interview. All other information has been paraphrased from concurrent coverage in international and Indian media outlets.