 "From pineapples to chips and rare earths, China weaponizes everything")
From blocking Taiwanese pineapples to slapping tariffs on Australian wine and restricting chip exports to the West, China has long used trade as a tool of geopolitical pressure.
According to a Financial Times report, now, the country is turning to something far more strategic and potent: rare earth elements.
Soon after Beijing imposed new restrictions on exporting rare earth minerals and the specialised magnets made from them, the global auto industry warned of potential shortages that could lead to factory shutdowns.
China’s strategic use of rare earth sanctions this spring was likely a decisive factor behind Washington’s decision to roll back its tariff increases on the country, added the report.
This marks a new chapter in Chinese economic statecraft, demonstrating a sanctions approach capable of exerting pressure not just on smaller neighbours, but on the world’s largest economy as well.
According to the report, while China has frequently employed economic sanctions in recent years, many of these actions have been blunt and only partially effective.
Often, punitive measures were subtle or officially denied - for instance, claims that Chinese tourists lost interest in visiting the Philippines, Taiwanese pineapples failed health inspections, or Chinese consumers simply chose not to buy Korean products.
Impact Shorts
More ShortsGovernment-backed boycotts have inflicted economic pain on China’s trade partners but delivered mixed political results. They’ve deterred some countries from hosting the Dalai Lama or contesting Beijing’s South China Sea claims, yet faltered on core national interests, added the report.
Australia stood firm despite China’s wine import cuts over policy disputes. South Korea kept its missile defence system despite Chinese sanctions. And China’s earlier sanctions against the US — including blacklisting defence companies and imposing licensing regimes on certain mineral exports — have been more political signal than economic substance.
Rare earth export controls
The new rare earth export controls are different.
In weeks, they threatened to close major auto factories — the largest sector in advanced economies — and pressured the US into rolling back its trade war measures.
According the Financial Times report, in just a handful of weeks they threatened to shutter key factories across the auto industry — the largest manufacturing sector in most advanced economies.
They also brought the US president to heel on his signature initiative: the trade war.
The White House believed it had secured escalation dominance, assuming soaring tariffs would force Beijing to negotiate due to unbearable costs. However, China’s leaders were willing to bear the political fallout from the tariffs, while Washington couldn’t overlook the critical loss of rare earth materials and its severe impact on the auto industry, added the report.
Why these sanctions worked
China’s latest sanctions succeeded in part because Beijing has refined its toolkit, creating a legal framework to restrict strategic exports and gaining deeper insight into the vulnerabilities of its trading partners, reported FT.
It has even extended its reach extraterritorially, demanding that companies abroad avoid using Chinese minerals in products destined for the US defence industry. Beijing’s strategy relied on the assumption that other major partners would not blame China for the rare earth restrictions, but instead pressure Washington to ease tariffs, added the report.
Since April, Chinese exports of rare earth minerals and magnets have dropped not only to the US but also to key partners like Japan and South Korea.
Indian automakers have cut production amid material shortages, while European Commission President Ursula von der Leyen highlighted rare earth magnets at the June G7 meeting to urge greater non-China production. The EU is now prioritising rare earth exports in its diplomatic talks with China.
China’s rare earth restrictions have had broad global effects, revealing limits in its ability to precisely target only the US. It’s easier to control specialised equipment than widely traded commodities like rare earth oxides, which other countries can still sell quietly to American buyers.
The most striking issue is how unprepared Western governments and companies were. Despite widespread awareness of China’s dominance, the West has failed to secure alternative suppliers since China first cut rare earth exports to Japan in 2011.
Some progress was made — South Korea built stockpiles and Japan invested in Australian mines — but most Western critical minerals strategies lacked funding. Manufacturers claim resilience but often keep just a week’s supply of rare earth magnets. This was a clear vulnerability they ignored — and Beijing’s move was no surprise.
With inputs from agencies
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