By Alan Ting

KOTA KINABALU, Malaysia: The Trump administration’s recent drive to lock down access to rare-earths and critical minerals is being sold as a matter of national security. Yet what looks like strategic prudence on the surface amounts to geopolitical coercion in practice. 

Pressuring Southeast Asian neighbours into hurried “critical-minerals” deals in return for tariff relief, while simultaneously trying to cut China out of supply chains, will not create reliable, resilient supply systems. 

Instead it will provoke workarounds, resentment and global market disruption — all while leaving the United States and its allies still desperately short of the refined materials that matter most.

Start with a straightforward reality: China dominates the rare-earth value chain. By 2025 it accounted for the overwhelming share of refining and magnet production, controlling an estimated 90 per cent of global processing capacity and nearly all high-value magnet manufacturing. 

That concentration is not accidental; it is the result of decades of integrated industrial policy and investment in mining, refining and downstream manufacturing. Any attempt to “de-couple” China from these supply chains overnight is therefore a logistical fantasy, and a recipe for disruption. 

Which materials are we talking about? The metals at issue are not exotic trivia; they are the essential ingredients of modern electrification and defence. Neodymium and praseodymium (often combined as “NdPr”) power the permanent magnets at the heart of electric-vehicle motors and wind turbines. Dysprosium and terbium are heavy rare earths that maintain magnet performance at high temperature, crucial for advanced military systems. Lanthanum and cerium are widely used in catalysts and polishing agents, while yttrium plays a role in lasers and electronics. Shortages of any of these can ripple through consumer, industrial and defence supply chains alike. 

Those who think mineral endowment alone settles the question misunderstand the bottleneck. Deposits exist around the world, but geology is only the first step. 

China’s giant Bayan Obo complex in Inner Mongolia remains the single largest rare-earth resource in the world and has long supplied the bulk of feedstock for Chinese processing plants. 

Outside China, the Mountain Pass mine in California, owned by MP Materials, and Australia’s Mount Weld, exploited by Lynas, are valuable sources of ore, but neither country until recently matched China’s downstream capacity or the integrated industrial ecosystem that turns oxides into magnets and finished components. 

Building that capability takes years, billions in capital, and the political patience to accept lower returns while refining capacity is established. 

That is why recent U.S. pressure on Malaysia, Thailand and Cambodia matters. In Kuala Lumpur and Bangkok this month Washington signed memoranda of understanding and cooperation on critical minerals, part of a high-profile tour that paired tariff threats with offers of investment. 

These “agreements” are intended to diversify supply away from China, but they come with strings: political expectations of alignment, commitments that make it harder for partners to balance relationships with Beijing, and subtle pressure to permit U.S. access to deposits and refining projects. 

In Malaysia’s case, for example, the government asserts a continuing ban on raw exports and an aim to retain domestic value-added processing, yet signing frameworks with Washington that limit export restrictions creates a contradiction that will be difficult to reconcile. 

Put simply, these deals are being negotiated at the barrel of a tariff. Governments that depend heavily on China for trade and investment will naturally seek to avoid punitive measures. 

They will therefore sign provisional MOUs and memoranda that look like success in the short term, but in practice these arrangements will be fragile, reversible and open to exploitation. 

When national survival is on the table, pragmatic governments will also search for workarounds — transshipment, undeclared exports, partnerships with other refiners, and bilateral deals with private firms from China, Russia or elsewhere. In other words, coercion seldom buys loyalty; it creates incentives for circumvention. 

The economic consequences of mismanaging such a transition are real. Recent market moves demonstrate how tight the margins are: NdPr prices spiked this year after disruptions to supply and policy moves by Western miners, underscoring how dependent downstream manufacturers are on stable feedstock. 

Goldman Sachs and the IEA have both warned that even small supply interruptions could inflict outsized damage on high-tech manufacturing, with Goldman estimating that a sustained 10 percent supply disruption could translate into many billions of dollars of lost output across economies. 

The lesson is not merely economic: when critical inputs for clean energy and defence become politicised, states face hard choices between national security and industrial survival. 

There is a deeper strategic incoherence at work. What Washington really needs is not more raw ore exported under U.S. auspices, but secure refining, separation and magnet production — the industrial steps in which China still enjoys near-monopoly control. Efforts to “cut China off” at the mine face therefore miss the point. 

The U.S. response should be long-term industrial policy: invest in refining, support magnet manufacturing, underwrite environmental compliance, and build genuine regional partnerships that do not coerce partners into choosing sides. 

The hastily signed MOUs and tariff threats are the opposite of that: they are a short-term political fix masquerading as strategic policy. 

Finally, the diplomatic fallout matters. Economic coercion fuels diplomatic resentment and drives some countries closer to the very markets Washington hopes to displace. 

Southeast Asian governments will not willingly accept arrangements that force them to choose between their largest trading partner and a political benefactor. 

If Washington persists with heavy-handed tactics, it will hollow out the multilateral partnerships it needs to build durable supply chains, and it will accelerate the very strategic realignment it seeks to prevent.

There is a better way. If the United States truly wants resilient, diversified critical-minerals supply chains, it must match rhetoric with patient investment and honesty. 

That means financing refineries, transferring technology, supporting environmental safeguards and, crucially, refraining from using tariffs as blunt instruments of geopolitics. 

Otherwise, the result will be needless market shocks, a loss of American credibility in the region, and a world in which no one’s supply chains are secure — least of all America’s.

*Alan Ting is an observer of regional affairs and global geopolitics based in the Land Below the Wind.*