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The computer on which I am typing this newsletter, and the device on which you are reading it, depend on rare-earth elements, whose geopolitical significance has become vividly apparent in the past year. Yttrium and terbium are used in colour displays; a smartphone’s camera lenses contain lanthanum; neodymium goes into the tiny magnets used in its speakers. Rare earths are also vital ingredients in military technologies (such as radars and drones) and clean technologies (such as wind turbines and electric-car motors).
China dominates the supply and processing of these materials, and it weaponised this control last year to outplay Donald Trump after he imposed tariffs on its exports to America. By choking off the supply of a few rare earths, China was able to win concessions. But it is not just rare earths. China also dominates extraction and refining of tungsten, gallium, lithium and many other critical minerals. Its grip on these resources, and its willingness to exploit it, has exposed the West’s most serious strategic weakness in many years. Our cover story this week considers how America is responding as it tries to break China’s chokehold.
America’s firms, and its government, have been investing in mines and exploration sites around the world. The Trump administration has signed mineral-related deals with more than 20 countries, from Argentina to Uzbekistan. Access to minerals has also shaped American policy towards Ukraine, Venezuela and Greenland. As
we outline in our briefing,
the government is providing loans, subsidies and direct investment, and has promised to create stockpiles and set price floors.
The Economist is a champion of free markets. But in this case, as
we argue in our leader,
intervening in commodity markets makes sense. The trouble is that America is going about it in the wrong way. Its spending is wasteful and poorly targeted. There is a risk of cronyism, rent-seeking and corruption. And muting price signals will discourage innovation and conservation. We lay out how we think America could better manage its campaign. And we highlight one valuable asset that America is overlooking in its quest for the minerals it needs: its allies.
Elsewhere, the latest episode of The Insider considers the objectives—or lack thereof—of Mr Trump’s vast military build-up in the Middle East. What does he want American bombs and missiles to achieve in Iran? Without clear war aims, he risks being drawn into a choice between escalating or looking weak. Edward Carr, another of our deputy editors, is joined by a panel of our journalists to consider the risks of Mr Trump’s muddle, and examine the options available to the president. You can
watch it now.
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