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China's grip on minerals threatens AI boom in US
The Observer
|October 12, 2025
The country's tightened chokehold on rare earths spurred a tariff backlash and could undermine supply chains, writes Barney Macintyre
US technology stocks lost roughly £770bn in market capitalisation on Friday after Beijing placed restrictions on critical mineral exports and President Trump retaliated by threatening a 100% tariff on Chinese goods.
China's tightening of its chokehold on the supply of rare earths comes at an inopportune moment for American tech companies, which have been riding high on a wave of optimism about artificial intelligence but are also facing questions about whether the largest players, including Nvidia and OpenAI, are becoming too financially interdependent.
"China is signalling: we're willing to threaten your primary growth driver," Chris Miller, the author of Chip War, told news site Axios. “People are looking to see whether the Trump administration builds alternative sources of leverage against China that forces them to back down.” Trump has said the additional tariffs would come into force on 1 November, before a summit with Chinese leader Xi Jinping in South Korea.
This story is from the October 12, 2025 edition of The Observer.
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