Highlights

• Researchers map growing fracture lines in global rare earth trade, showing a shift from globalization to regionalization with emerging Asian trade blocs.
• Export restrictions and trade barriers could make rare earth supply chains less efficient, potentially undermining clean energy technology development.
• The study advocates for 'open regionalism' to maintain supply stability and technological progress through cooperative, inclusive trade frameworks.

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A sweeping new study led by Yawen Han and Peng Wang from the Chinese Academy of Sciences (opens in a new tab), published as a pre-proof in iScience (Elsevier, September 25, 2025), maps the growing fracture lines in the global rare earth trade network as national policies harden and alliances shift. Using a global simulation model combined with network analysis, the researchers examine how export restrictions, regional coalitions, and trade liberalization might reshape flows of the minerals that power electric vehicles, wind turbines, and defense systems.

Study Findings: From Globalization to Fragmentation

The team analyzed rare earth trade data from 77 economies and found that the world is moving rapidly from globalization to regionalization. Once dominated by China, the network now features new regional hubs—particularly Japan, Malaysia, and Vietnam—forming an emerging Asian trade bloc that increasingly mediates the China–U.S. exchange.

Simulations showed that export restrictions by non-Chinese suppliers could now rival China’s influence. A coordinated 25% export tax imposed by major Western and Asian exporters would reduce global trade volumes by more than 10%—comparable to the impact of a similar Chinese export tax. By contrast, removing all tariffs worldwide would increase total trade by less than 3%, suggesting that tariff cuts alone cannot restore a fully globalized market.

The study also found that trade barriers—whether from “friend-shoring” blocs or bilateral tariffs—reinforce regional silos and weaken cross-border integration. Two distinct communities now dominate global trade: one centered around China and Myanmar, the other around Japan and Malaysia, mirroring a world increasingly split between industrial and geopolitical alignments.

Implications: The Risks of Over-Regionalization

The authors warn that escalating trade barriers could make the rare earth supply chain less efficient and more fragile, increasing costs for clean energy technologies. A full decoupling between the U.S. and China, they argue, would raise production expenses, disrupt supply efficiency, and slow innovation—ultimately undermining the energy transition itself.

To mitigate these risks, the study advocates for “open regionalism”—a cooperative trade model that emphasizes inclusion, transparency, and non-discrimination, rather than exclusive “friend-shoring” blocs. Under such frameworks, recycling, substitution research, and balanced investment partnerships (including both Western and non-Western players) could sustain supply stability and technological progress.

Limitations: Modeling the Uncertain Future

The authors acknowledge that their simulation model—the Global Simulation Model (GSIM)—relies on fixed elasticity parameters and does not capture long-term shifts such as secondary supply, recycling, or material substitution. While this approach effectively models short- to medium-term dynamics, it simplifies how geopolitical actions ripple through the multi-stage rare earth value chain—from mining to magnets.

Conclusion: A Warning and a Way Forward

Han and Wang’s findings offer both a cautionary tale and a policy roadmap. Trade fragmentation, they conclude, threatens to replace one dependency—on China—with many smaller, less stable ones. The future of rare earth security, and by extension clean energy progress, will depend less on walls and tariffs than on bridges built through open, rules-based cooperation.

Citation:  Han, Y., Wang, P., Liao, Z., Tang, L., Song, W., Gao, T., Hao, H., & Chen, W.-Q. (2025). The divergence of global rare earth trade networks under national geopolitical actions. iScience. https://doi.org/10.1016/j.isci.2025.113658 (opens in a new tab)

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