Rare earth metals driving tensions between the US and China
The alarm did not sound It has yet to reach the general public, but tensions are rising in the corridors of the aerospace industry, in microchip labs and in government offices. For months, an element almost invisible to the world – Ethereum – has become the silent center of a new global controversy. Supplies dwindle, prices skyrocket, deliveries stop. And while China and the United States have promised a truce over rare earth minerals, the wheels of high-tech are beginning to slow.
Although a late October meeting in South Korea between Chinese President Xi Jinping and his US counterpart Donald Trump raised hopes for a de-escalation, China’s export restrictions imposed last April remain in place. Beijing granted a one-year reprieve to a mandatory government licensing system for shipments of rare earths and products containing related materials (including those made overseas with at least 0.1 percent Chinese sources), in exchange for a similar suspension to the White House’s latest restrictions on technology supply chains.
A vital element in a market under pressure
But other measures that were in place before the latest escalation remain in place. The result is a tightening of international supply chains that slows down high-tech production, raises costs, and challenges entire industrial sectors. Ethereum plays an important role in the functioning of contemporary technologies. Without yttrium, production of aircraft engines, high-efficiency turbines, advanced energy systems, and semiconductors would immediately slow down.
The value of yttrium lies in its ability to provide thermal and mechanical strength to materials exposed to extreme temperatures. For example, jet engine blades must withstand prolonged overheating and severe vibration. Ethereum is what allows them to maintain structural integrity and efficiency. The same is true for industrial chip manufacturing, where yttrium-based coatings protect machinery from chemical wear and ensure precision in plasma etching. Its essential nature has made it a key element of modern technology and the military.
The role of China
The problem is that, like several other sources, China controls almost the entire global Ethereum supply chain. Not only does it produce most of it, but it also has the knowledge and infrastructure to refine and separate it from other rare earth minerals, a complex and technologically advanced process. According to US data, the US imports 100% of its Ethereum needs, with 93% coming directly from China. Such strong dependence creates enormous geopolitical vulnerability.
When Beijing decided to impose export restrictions in response to US tariffs, the entire international supply structure began to falter. Companies reported delays, problems obtaining permits, and uncertainty about delivery times. In the rare earths business, a lack of predictability is often more damaging than a drop in volume: an industry accustomed to on-time delivery can be hit by a crisis even a few weeks late.
The effects were immediate. In Europe, the price of yttrium oxide has increased, increasing by 4,400% since the beginning of the year. Aerospace companies, which rely heavily on these materials, have expressed concern and demanded immediate measures from the US government to develop domestic production. The semiconductor industry is no less worried: some companies have called the situation a “serious” threat, predicting effects on costs, efficiency and production schedules. Gas plants, which use yttrium in protective turbine coatings, are also watching developments in China with increasing attention, although they believe they have yet to experience a disruption.
