Is the Rare Earth War Between the USA and China Leading to Global Standstill?
The economic conflict between the US and China is escalating dramatically. While Washington is threatening drastic punitive tariffs, Beijing is further tightening export controls on rare earths. The result: jittery markets, rising commodity prices—and a global economy on the brink of shock.
Markets in Free Fall: Fear Takes Hold
Last Friday, stock markets experienced one of their sharpest declines in months. The S&P 500 plummeted by 2.7% after US President Trump announced plans to raise tariffs on Chinese goods from 30% to as high as 130%. The escalation is hitting markets with full force, with investors fleeing to safe havens. The question now on everyone’s mind: How far can this economic war go before it strangles the global economy?
Power Struggle Over Technology – China Focuses on Control
At the heart of the conflict lies China’s pursuit of access to cutting-edge semiconductor technology—an area the USA has consistently blocked for years. Beijing shows selective accommodation, such as restricting deliveries of militarily relevant machinery to Russia. However, in the strategic race for technological supremacy, China remains uncompromising. Both sides are fighting for dominance—and neither wants to back down.
Europe: The Underestimated Victim
Europe is not spared either. The automotive industry in particular is suffering from shortages of rare earths and technology metals. In the first half of 2025 alone, germanium exports from China to the EU collapsed by approximately 60%—with severe consequences: production stoppages, short-time work, and threatened plant closures. According to a recent McKinsey study, four million jobs in Germany’s automotive, energy, and aerospace sectors would be at risk if China were to stop supplying. Around 370 billion euros in value creation would be threatened—approximately nine percent of total gross domestic product.
Anyone who believes Europe is merely a spectator in this conflict is mistaken: China is now responding specifically to European measures—such as the planned tariffs against Chinese electric vehicles.
"It Was All Predictable" – Warnings No One Wanted to Hear
Back in October, at the second Values Forum Future in Düsseldorf, our Marketing CEO Andreas Pietsch demonstrated how foreseeable these developments were. Already in our book “The Cocaine of Industry,” we aptly described the power dynamic between Beijing and the West: China is the dealer, industry is the addict.
Today it is clear how right we were: Prices for rare earths have exploded in recent months, deliveries from China are becoming increasingly unpredictable—and those who invested early in these commodities are benefiting doubly: economically and strategically.
The Real Threat to Our Prosperity
Our prosperity does not depend on social reforms, but on the question of whether Europe will continue to have access to critical commodities in the future. Without access to germanium, gallium, or dysprosium, not only will the energy transition come to a halt—national security, technology, and jobs are also at risk. The federal government should clearly focus on security of supply rather than treating symptoms such as citizen’s allowance.
Conclusion: Act Instead of Wait
The battle for rare earths is no longer merely a trade dispute—it is a geopolitical power struggle over resources, technologies, and the future of industrial strength.
Europe must finally act strategically. This requires:
- Minimum prices for critical commodities to dampen price fluctuations and stabilize supply.
- A central demand registry where companies report their raw material requirements to identify shortages early.
- A resilience certification for security-relevant sectors, particularly for the defense industry.
- Provision of venture capital.
- Establishment of government stockpiles.
Only through decisive action can Europe secure its industrial independence—and prevent the rare earth war from leading to global standstill.