How China's Monopoly on Rare Earths Trumps America's Tariff Power

The global balance of power isn't just about military might or economic sanctions—it's increasingly about who controls the critical materials that power our modern world. China has masterfully positioned itself as the dominant force in rare earth elements, controlling 70% of mining and 90% of refining for these 17 elements essential to everything from smartphones to missile guidance systems. When faced with Trump's tariffs, China responded not with matching broad strokes but with surgical precision, restricting rare earth exports and creating immediate shortages in US defense manufacturing. Further Reading: Chain Reaction Review

Meanwhile, a deeply troubling pattern has emerged in American governance: the systematic dismantling of scientific institutions. With over 400 documented attacks on science in just six months, mass layoffs of scientists, frozen research grants, and the replacement of expert advisory boards with ideological appointees, the foundation of evidence-based policy is crumbling. This isn't just an academic concern—it creates real blind spots in our ability to manage everything from pandemic responses to climate disruptions that affect global supply chains.

The ripple effects extend throughout the economy. President Trump's proposed 100% tariffs on imported semiconductors demonstrate a fundamental misunderstanding of how modern supply chains function, where components cross borders multiple times during production. European efforts to build battery independence through Northvolt ended in Sweden's largest industrial bankruptcy, highlighting the challenges of scaling green technology manufacturing. Even the Federal Reserve faces unprecedented political pressure, with Trump publicly demanding the resignation of Governor Lisa Cook and threatening to tip the balance of the central bank toward political loyalty rather than economic independence. As we navigate these treacherous waters, both companies and citizens must recognize that sustainable prosperity requires both reliable supply chains for critical materials and trusted institutions that provide the data and evidence needed for sound decision-making.

Chapters

• 0:00 China's Rare Earth Dominance
• 5:35 The Attack on US Science
• 15:18 Supply Chain Headlines This Week
• 19:07 Northvolt's Bankruptcy and Revival
• 24:07 Political Interference in US Institutions
• 29:52 Economic Outlook and Supply Chain Trends

Transcript

Tony Hines: 0:32

China's Rare Earth Supremacy 70% of global rare earth mining takes place in China, 90% of global refining and magnet production in China and the entire vertically integrated supply chain from extraction to high-performance magnet fabrication. Rare earths are essential for electric vehicles, wind turbines, smartphones, advanced defense systems such as missile guidance, night vision and drones. And China's edge isn't just geological, it's technological and it's industrial it's filed over 25,000 rare earth related patents and built unmatched expertise in refining and processing. When Trump imposed 145% tariffs on Chinese goods and restricted semiconductor exports, china retaliated by imposing strict export controls on rare earths and magnet technologies, requiring export licenses for each shipment, creating delays and uncertainty. They blocked exports of key materials used in US defense manufacturing, causing shortages and price spikes, and some elements rose by 60 times in price. It created a chokehold on the United States defense supply chains, forcing companies to dip into emergency reserves and delay production of critical equipment like fighter jets and infrared sensors. The Trump administration scrambled to reduce dependence $400 million investment in MP materials, the only active US rare earth mine, making the Pentagon its largest shareholder. Price guarantees for domestic producers $110 per kilogram for neodymium that's used in magnets and all kinds of devices the neodymium even in this microphone and presodymium, relaxed tariffs and visa restrictions in exchange for short-term rare-earth access from China, and there was strategic stockpiling in recycling, research and development, inspired by Japan's response to a similar cut-off in 2010.

Tony Hines: 2:58

Despite all these efforts, the US remains vulnerable. Even Japan, after a decade of diversification, still sources over 70% of its rare earths from China. Rare earths, by the way, are the 17 elements which are classified as rare earths, but in fact they're not so rare, although China has a near monopoly on the supply. China's rare earth dominance is more powerful than tariffs. It's a geopolitical lever. Trump's tariffs may have been loud, but China, with its export controls, was surgical. They hit where it hurt defence tech and green energy. And while the United States invests billions to build a parallel supply chain, china's lead in refining, magna production and rare earth isotope control for example, etobith171 for quantum computing remains formidable. So the United States, for all the noise it's making with regard to tariffs, has little control or dominance over these very important rare earths, which are necessary for its own development. And China can sit back and quietly resist those tariffs that Trump thinks are so important for the United States. But the reality is he's doing untold damage to the world economy and, of course, to the American economy. Now you can drop by to the Chain Reaction Review and there you'll find my article on the 17 Rare Earths. So if you want to find out more, follow the link in the episode notes.

Tony Hines: 5:03

Now there's an attack on science in the United States and I don't really know what's going on. It seems to be very political. I read a detailed argument which was in Nature, and the attack on science in the US has become deeply concerning, especially under President Trump's administration. So what's happening? Well, there's been a systematic undermining of scientific institutions Over 400 documented attacks on science between January and June 2025. That's according to the Union of Concerned Scientists. Federal agencies like the CDC, the NIH, epa, noaa, have seen mass layoffs, up to 120,000 workers removed, including many scientists. Research grants have been frozen, advisory committees dismantled and public health agencies defunded. It's been politicised completely. Executive orders now allow political appointees to police scientific research under a so-called gold standard science framework, which critics say is Orwellian. Vaccine advisory boards have been purged and replaced with ideologically aligned individuals, undermining evidence-based policy. Certain scientific terms and topics have been banned from federal communications, echoing authoritarian tactics.

Tony Hines: 6:44

The Union of Concerned Scientists argue that documenting these attacks is essential to resisting authoritarian control and protecting democratic institutions. Politicizing science is a tactic used to suppress inconvenient truths and control narratives. Professors from the United Kingdom, netherlands and the United States warn that this is part of a global trend where populist regimes delegitimize expertise and replace evidence with ideology. They stress the need for legal safeguards, decentralization and diversified funding to protect scientific integrity. The CEO of AAS, sudip Parikh, emphasizes that science is a search for truth and objectivity and that this pursuit is now under threat. Calls for scientists and institutions to speak out and defend the role of evidence in policy-making. And there are some quite broad implications here Public health cuts to HHS and CDC-threatened vaccine programmes, disease surveillance and emergency response. Cuts to HHS and CDC threatened vaccine programs, disease surveillance and emergency response. On climate policy suppression of climate science weakens environmental protections and global cooperation. And on the global standing, the US risks losing its leadership in innovation and scientific diplomacy when we think of all those bodies.

Tony Hines: 8:18

The UCS, this Union of Concerned Scientists. That's a non-profit advocacy group focused on science-based solutions to global problems, which includes climate change, public health and government accountability. The CDC is the Centre for Disease Control and Prevention and it's the leading national public health agency in the United States responsible for disease prevention, surveillance and emergency response. The National Institute of Health is the NIH. It's a primary agency of the US government responsible for biomedical and public health research. Responsible for biomedical and public health research. The EPA is the Environmental Protection Agency, a federal agency tasked with protecting human health and the environment through regulations and research. And the National Oceanic and Atmospheric Administration, the NOAA, is a scientific agency focused on the coordination of the ocean's major waterways and the atmosphere. The HHS is the Department of Health and Human Services, the US government's principal agency for protecting the health of all Americans and providing essential human services. The AAAS is the American Association for the Advancement of Science, the world's largest multidisciplinary scientific society, known for publishing the journal Science and advocating for science policy. The BMJ is the British Medical Journal, a respected peer-reviewed medical journal that often features global health policy commentary and research. And the ESG is the Environmental, social and Governance, a framework used to evaluate corporate behavior and sustainability, increasingly central to investment and supply chain strategy.

Tony Hines: 10:14

Let's take a look at how this all impacts global supply chains. Well, the loss of data integrity is a key concern. Agencies like the NOAA and the CDC provide critical data for logistics, disease tracking and climate-related disruptions. Undermining them creates blind spots in global risk modelling. Scientific input into tariff decisions food safety and environmental standards is being sidelined, and it's causing trade policy volatility. This increases unpredictability in cross-border trade. And then, of course, public health disruptions. Weakening the CDC and NIH affects pandemic preparedness and vaccine distribution, which are tightly linked to supply chain continuity. The strategic implications of all this companies may need to diversify sourcing and build resilience against regulatory whiplash. Expect increased reliance on private data providers and international institutions like the World Health Organization or the ECDC, the European Centre for Disease Prevention and Control.

Tony Hines: 11:31

Scenario planning must now include political interference and scientific infrastructure, and this move against ESG policy is very concerning too. It's a reversal and rebranding in many ways, and the key impact is the environmental rollback of the EPA, defunding and climate science suppression, weakened enforcement of emissions standards and pollution controls. And you can recall, can't you, president Trump, shouting drill for oil, drill, baby drill. And so all that concern about climate and the environment has been pushed back under this Trump administration. The social metrics are distorted, public health data, labour safety standards and demographic research are politicised, making ESG benchmarking unreliable, and there's governance erosion. Scientific advisory boards are being replaced with ideologically aligned figures, undermining transparency and accountability.

Tony Hines: 12:40

The strategic implications of all this. Investors and rating agencies may shift towards third-party ESG audits and international frameworks like GRI or SASB. Firms will need to document ESG compliance independently, especially if the United States standards diverge from the EU or the UN norms. And then there's narrative control Controlling the story. The output becomes vital. Companies must clearly communicate their science-based commitments to stakeholders to stakeholders.

Tony Hines: 13:16

International trust erodes. The United States researchers may be excluded from global consortia due to this politicized agenda or data unreliability. Funding freezes. The NIH and NSF cuts reduce the United States contributions to joint research, especially in climate, health and AI. Talent exodus Scientists are leaving federal agencies and academia, seeking more stable environments abroad. Universities and labs may relocate partnerships to Canada, the EU or Asia and expect a rise in private sector research and development and philanthropic science funding to fill the vacuum. Open science platforms and decentralised peer review may gain traction as trust in centralised institutions wanes.

Tony Hines: 14:13

So it's all very concerning, all very worrying. And why would you do this, unless you're really a control freak who doesn't believe in science? Whose interests does it really serve? Who's pushing the agenda? That's the question you should ask. And why? Well, I'll leave that for you to think and ponder about.

Tony Hines: 14:46

Well, here are some news items hitting the headlines this week. Ford's $5 billion EV supply chain overhaul. Ford's investing $2 billion to convert its Louisville plant for EV production, launching a mid-sized electric pickup by 2027. It's part of a broader $5 billion strategy, including battery facilities in Michigan, and they aim to secure 4,000 jobs while transitioning to a universal EV platform for affordability and scalability. Dhl Robotics is pushing in the UK and Ireland, deploying AI-powered warehouse robots to boost logistics efficiency. Ai-powered warehouse robots to boost logistics efficiency it's part of its 2030 strategy push focusing on automation and market responsiveness.

Tony Hines: 15:49

Ups said in the United States it will begin rounding all fractional package dimensions. That means in length, in height and width It'll go to the next whole inch and that starts on August the 18th and this brings it into alignment with FedEx, who previously announced similar changes. Ups rounded down dimensions less than half an inch, but now this will significantly impact shipping costs and some firms say it'll change their costs significantly and it might lead to higher dimensional weight charges, even for packages that they've previously sent at lower cost. That they've previously sent at lower cost. So, for example, if you've got a package and it's 11.1 inches, it'll go to 12 inches and that'll push up the cost. So you better check your dimensions.

Tony Hines: 16:51

President Trump this week proposed 100% tariffs on imported semiconductors. He'll exempt companies manufacturing in the United States, but it could reshape global tech supply chains. Trump was also quoted as saying he was going to set those tariffs on chips at two or three hundred percent when asked about them on Air Force One. So it shows you how chaotic everything is. And chips, of course, aren't manufactured in any single country. The parts, the raw materials for those chips obviously come out of different countries and they cross borders many times. So this is the complexity of modern supply chains that the Trump administration just can't get their head around. I should try reading Chris Miller's book on chip wars. It might get them a bit more informed about the complexity of chip manufacture. I don't think the administration in the United States really knows what it's doing and what damage it can be doing with these tinkerings. I've got a new name for President Trump. I think I'll call him the Tinkerman. I know there was a famous football manager in the United Kingdom they used to call the Tinkerman, but I think Trump's taken the title right now. He's a tinkerer and a tinker, but not a thinker.

Tony Hines: 18:30

Remember Northvolt. It was that initiative To start an EU battery plant. Well, it's on again. Leighton has revived the Northvolt EU battery project. It's acquiring bankrupt Swedish battery maker Northvolt. They plan to restart lithium-ion cell production by 2026.

Tony Hines: 18:54

Remember Britishvolt? They were similar to Northvolt in some ways. They were going to be the big EV battery producer and the saviour of batteries in the United Kingdom for the big expansion of EVs and government money, and it's made policy thinkers actually think a bit more about how to support this type of company. They are, of course, high risk and it takes a long time before they actually produce anything, certainly in the case of Britishfield. But in the case of Northfield, they've had some big financial backers and they've got a lot of big companies in BMW, volkswagen and city. Financiers and other people put money into the company, but of course, it hit a bad patch and eventually went bankrupt.

Tony Hines: 19:51

Northvolt was founded in 2015, and between 2015 and 2017, he was trying to get things started. He was founded as SGF Energy by a former Tesla executive, peter Carlson, and another Tesla executive called Paolo Chirruti. Their mission was to build Europe's largest battery cell factory and create the world's greenest battery. They rebranded as Northvolt in 2017 to reflect the Nordic roots and sustainability ethos. They got major backers, as I said, Volkswagen, bmw, goldman Sachs and the European Investment Bank and they had a flagship plant, northvolt Airt, in Skellefteå in Sweden, and production began in 2021 and it all looked as if things were going to go really well. They had expansion plans for five additional gigafactories across Europe and North America and the sustainability focus committed to using 100% renewable energy and building vertically integrated supply chains.

Tony Hines: 21:00

It began to find challenges and decline after 2023. There were production shortfalls. They delivered only 80 megawatts of cells in 2023, just 0.05% of its 16 gigawatt hour target Contract losses. Bmw cancelled 2 billion euro deal down the drain in mid-24, due to delays and quality issues. And then there were financial struggles, reported 1.2 billion loss in 2023, laid off 20% of the workforce by late 24, and they filed for Chapter 11 bankruptcy in the United States in November 24., declaring bankruptcy in Sweden in March 25. It's the largest industrial bankruptcy in Swedish history.

Tony Hines: 21:54

So what can we learn from Northvolt? Well, its ambition against execution. Despite securing 50 billion US dollars in future contracts, northvolt couldn't scale production reliably. Demand for locally made batteries remains strong in Europe. There's a big appetite, but execution gaps can be costly and of course, there's a supply chain, complexity, vertical integration and sustainability goals, added to the operational strain. It's reminiscent in some ways of the British venture. British Volt was founded in 2019, planned as a major gigafactory in Blyth in the northeast of England, but it faced its own financial collapse. It never really got going. It was often cited as a more mature counterpart, having delivered batteries and secured major funding, but the comparisons with Northvolt demonstrate the high risk of scaling green energy tech startups. The very capital-intensive and Northvolt struggles prompted the UK policymakers and stakeholders to reassess how to support domestic battery. Initiatives need strong governance, realistic scaling timelines and diversified investment, so it'll be interesting to see if the new Northvolt will have a better outcome than the old Northvolt.

Tony Hines: 23:35

In recent months, a troubling pattern has emerged in the United States, and it's one that threatens the integrity of democratic oversight. Let's rewind. In 2017, the intelligence community Assessment backed by the CIA, fbi and NSA, concluded that Russia sought to undermine public faith in US democracy. That assessment was later reaffirmed by a bipartisan Senate report, but in 2025, a politically appointed CIA director launched a review. It criticized the tradecraft, questioned the inclusion of the Steele dossier and suggested the process was rushed. The findings weren't refuted, just reframed, and the analysts who stood by the original assessment? Many were removed, including the Russian affairs expert. This fits a larger pattern.

Tony Hines: 24:32

The Supreme Court now allows presidents to remove agency heads without cause. Human rights reports are being rewritten. International institutions are being pressured to align with fossil fuel interests. What does this mean for global governance? When intelligence is politicized, trust erodes, sanctions enforcement weakens. Esg frameworks lose credibility. In trade, where transparency is paramount, these shifts undermine cooperation.

Tony Hines: 25:07

America's president also called for Lisa Koop, one of the governors on the Fed's board, to resign after Bill Pulte, the head of the Federal Housing Finance Agency, accused her of falsifying bank documents and property records to obtain a mortgage. Ms Cook said she had no intention of being bullied to step down. Lisa Cook is the first black woman to serve on the Fed's Board of Governors and she's facing pressure to resign over allegations of mortgage fraud. The claims centre on whether she improperly designated two properties as her primary residence to secure favourable loan terms. The allegations were amplified by William Pulte, trump's appointee to the Federal Housing Finance Agency, and quickly picked up by Trump himself, who publicly stated I'll fire her if she doesn't resign. Cook has denied wrongdoing and stated she won't be bullied into stepping down.

Tony Hines: 26:03

Cook is one of three Biden-appointed governors whose term extended beyond Trump's presidency, limiting his ability to immediately reshape the Fed's seven-member board. Removing Cook would allow Trump to appoint a loyalist, tipping the balance of the board towards his preferred monetary stance, especially as he pushes aggressively for an interest rate cut and criticizes the chair, jerome Powell. The Justice Department is now investigating the allegation which, if escalated, could provide a legal pathway for removal under the malfeasance clause. In the bigger picture, it fits into Trump's broader campaign to undermine the Fed's independence. He repeatedly attacked Powell over interest rate policy and budget overruns and is pushing for early confirmation of Stephen Miran, a loyalist economist, to fill another vacant seat. If Cook is removed, trump could control four of the seven board seats, potentially shaping monetary policy for years, even after he's gone. So this isn't just about one individual, it's about capturing the institution.

Tony Hines: 27:20

The Fed's credibility hinges on its independence, and politicising appointments and removals threatens the very foundation, with ripple effects across global markets, trade, confidence and the economy the Office of National Statistics in the UK reporting inflation at 3.8%, which is higher than expected and that will increase the cost of debt, particularly government debt, in the months ahead, and in the United States, there was talk that Jerome Powell might be about to lower the interest rate at the Fed. Now you'll recall that President Trump's been calling on Jerome Powell to do this for months and it's been resisted because of the economics and economic figures coming out of the US. Well, the US economy is growing, but it's fragile and it's uncertain, and the uncertainty is basically being caused by US administration policies which are confusing and chaotic. Gdp rose 3% in quarter two, but it's already fading. July job gains were just 73,000, and that's below expectation, and prior months were revised down by 258,000. Unemployment has ticked up to 4.25% and labour force participation 62.2%, which suggests there's some underlying weakness. Inflation remains sticky. Core CPI rose to 3.74% and the Fed's preferred PCE measure hit 3.42%. It complicates interest rate decisions, but the Fed are expected to bow to some political pressure and lower interest rates in the next week or two. Consumer sentiment is soft, despite strong corporate earnings, especially in tech. Fed Chair Jerome Powell warned of inflation risks tied to tariffs and immigration policy. There were no immediate rate cuts mentioned, but he did say that there might be some policy adjustments which people think will be rate cuts.

Tony Hines: 29:39

The supply chain outlook for autumn and beyond. Well, we've still got all the tariff shockwaves. There are New Year's tariffs between 10% and 35% on major trading partners, partners including China, the EU, uk and Japan, and they went into effect on August the 7th. Importers front-loaded shipments ahead of deadlines, causing record July import volumes, but there's an expectation there'll be a sharp fall in quarter four. Export volumes are down and tariff reclassification is emerging as a cost avoidance strategy In warehousing and freight warehouse. Prices are stabilising, but capacity is tightening due to carrier exits and inflation. Smaller logistics companies are driving growth, while large downstream players report inventory contraction. Ocean freights have fallen 58% year on year, but disruption in the Red Sea and tariff volatility are adding to cost and complexity. The trucking recession persists, with spot rates at historic lows and flatbed capacity tightening. A potential Union Pacific Norfolk Southern merger could reshape coast-to-coast rail with implications for pricing and job displacement.