- China has dominant control over rare earth minerals, which are crucial for various industries.
- The US and Italy are strengthening their partnership to establish alternative supply chains for these minerals.
- The goal is to reduce China’s influence and create a more balanced market. This shift highlights the importance of controlling the entire industrial infrastructure, rather than just relying on diplomatic efforts.
China’s grip on rare earths is once again showing why critical minerals have moved from the margins of trade policy to the centre of strategic competition. Chinese exports of rare-earth magnets to the United States fell 21% in August, extending a decline that Capital Economics says has accelerated more sharply in recent months than at any point outside the pandemic. Coming ahead of the Trump-Xi summit in Washington, the figures will reinforce concerns that Beijing is willing to test how far it can exploit its dominant position without formally breaking the fragile trade truce.
The vulnerability is structural. China controls up to 70% of global rare-earth mining and more than 85% of refining and production, giving Beijing influence over supply chains that feed industries ranging from electric vehicles and electronics to advanced weapons systems. Previous Chinese restrictions have already constrained Washington’s room for manoeuvre: the Trump administration has moderated elements of its trade and technology pressure as access to critical minerals became part of negotiations with Beijing.
This is the context in which the new Italy-US critical-minerals agreement should be read. Foreign Minister Antonio Tajani and Secretary of State Marco Rubio are signing an accord designed not merely to secure access to raw materials, but to create the industrial conditions for alternative supply chains. The agreement establishes a bilateral technical working group and opens the door to public and private investment across extraction, processing and recycling. Tajani has made the strategic rationale unusually explicit: the objective is to help create an alternative market in which China can no longer dictate prices.
The agreement therefore marks another step in the transition from critical-minerals diplomacy to industrial policy. Washington is already putting substantial resources behind that shift, including a $3 billion package announced in August for critical-mineral and battery projects linked to defence supply chains. Italy, meanwhile, brings a different set of assets. It is not a major mineral producer, but its manufacturing base, processing expertise, logistics infrastructure and position within the EU single market give Rome potential relevance further downstream.
The bilateral initiative also fits into a larger architecture. Italy’s accession to the US-led Pax Silica framework in July connected critical minerals with semiconductors, AI and digital infrastructure, treating them as parts of the same strategic technology ecosystem.
That distinction matters. Diversification cannot be achieved simply by finding new deposits. Mines require processing capacity; processing requires capital, energy and technology; new suppliers need predictable demand and long-term contracts. Beijing’s advantage lies precisely in having built this ecosystem at scale.
The 21% drop in magnet shipments is therefore more than another data point in US-China trade tensions. It illustrates the coercive potential created by concentrated supply chains — and why agreements such as the one between Rome and Washington increasingly concern not just access to commodities, but who controls the industrial infrastructure on which technological power depends.
