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The US and global economy face a critical challenge as China tightens its grip on rare earth elements and other strategic materials, threatening supply chains vital to industries ranging from automotive to defense. In a compelling discussion on Financial Sense Newshour, host Jim Puplava and energy expert Robert Bryce unpack the profound implications of this dominance, particularly in the context of US trade policies and tariffs. Bryce, an experienced author and journalist (see his Substack column here), issues a strong warning regarding the threats facing global markets and emphasizes the critical necessity for sustained strategic initiatives.

The Roots of the Crisis: Tariffs and China’s Retaliation

Bryce traces the current supply chain crisis to the US-China trade war that escalated in 2019 under the Trump administration. He cites a prescient warning from People’s Daily Online on May 31, 2019, shortly after tariffs were imposed: “There’s no winner in a trade war. We advise the US side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you.” China’s response has been deliberate and devastating. Since April, it has restricted exports of rare earth elements like neodymium, dysprosium, and terbium, critical for modern technology. “China is now slow-walking export permits,” Bryce explains, leaving global automakers like Ford scrambling on a “week-to-week” basis, as reported in a June 24, 2025, Wall Street Journal article.

China’s Dominance: A 30-Year Strategy

China’s control over rare earths is no accident but the result of a decades-long industrial policy. Bryce notes, “China has had an industrial policy in place now for more than 30 years to control strategic elements.” This dominance, covering about 90% of the global rare earth magnet market, extends to 33 strategic elements, from antimony to yttrium. The International Energy Agency’s May 2025 report, analyzed by Bryce in his Substack piece “Anti-Magnetic” (robertbryce.substack.com), reveals that China’s grip is not only entrenched but growing. “The West has just sleepwalked into this supply chain situation,” Bryce laments, highlighting a critical vulnerability for industries reliant on these materials.

Beyond Autos: Impacts on Technology and Defense

The ripple effects of China’s control extend far beyond the $1.8 trillion automotive sector. Bryce emphasizes the threat to technology, particularly semiconductors, which depend on restricted materials like germanium and gallium. “These are critical in all kinds of applications,” he says, from iPhones to AI data centers. Defense is equally at risk, with antimony and bismuth—used in munitions and lead-acid batteries—under China’s sway. This broad exposure underscores the urgency for investors to understand these risks. Bryce’s work, including his book A Question of Power: Electricity and the Wealth of Nations and the docuseries Juice: Power, Politics, and the Grid, provides essential context.

Nuclear Ambitions: Reality vs. Rhetoric

Bryce also critiques the US’s nuclear energy ambitions, praising President Trump’s recent executive orders as “the most important endorsements since Eisenhower’s Atoms for Peace speech” but cautioning against overoptimism. “The ambition to double nuclear by 2050 implies building 12 gigawatts a year, but no country has ever done that,” he says. Key barriers include excessive reactor designs, high costs (e.g., Plant Vogtle’s $36 billion price tag), labor shortages, fuel supply issues, and political short-termism. These challenges highlight the need for a coordinated, long-term strategy to bolster energy security.

China’s Long Game: Lessons from Deng Xiaoping

China’s strategic foresight stands in stark contrast to Western complacency. Bryce recounts a defining moment in 1992 when Deng Xiaoping declared: The Middle East has oil, but China has rare earths. We’re going to explore and exploit rare earths. This vision, executed over three decades, has made China the “OPEC of strategic materials,” as Puplava notes, with influence extending to copper, lithium, and cobalt in Africa and South America. Bryce warns that US tariffs and demands have backfired, with China responding mockingly: “Oh, you’re demanding? We love that word.” This geopolitical chess game demands a robust response, yet the US faces hurdles in political will and resources.

A Call to Action for the US

For financial audiences, the risks are clear: a supply shock—whether from China withholding materials or a geopolitical crisis—could disrupt markets and industries. Bryce advocates for a coordinated effort with allies like Canada and Australia, streamlined regulations, and significant investment in domestic mining and processing, as recently witnessed with the Department of Defense’s investment into MP Materials. However, “The US government doesn’t have extra cash lying around,” he notes, and political gridlock complicates progress.

Conclusion: Strategic Thinking for a New Era

Robert Bryce’s chilling analysis is a wake-up call for investors, policymakers, and corporate leaders to abandon short-term thinking and confront the existential threat posed by China’s dominance over strategic materials. “This is going to require a very long-term, sustained political effort,” Bryce warns, underscoring the monumental challenge ahead. The global economy stands at a crossroads: without decisive action, a supply shock could devastate industries, spike inflation, and erode market stability. Investors must recalibrate portfolios to hedge against these risks, prioritizing companies with diversified supply chains or exposure to domestic mining ventures in allied nations like Canada and Australia. Policymakers, meanwhile, must rally bipartisan support to streamline regulations, fund processing infrastructure, and forge international alliances—tasks made urgent by China’s strategic foresight and the US’s dwindling window to respond.

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