China’s export ban on rare earth elements helped to get the US back to the table on trade in 2025 – but history advises caution on the long-term effectiveness of weaponising mineral dominance
By Daniel Litvin, Chris Melville and Ben Macleod
In October last year, the Chinese government announced a new wave of expanded export restrictions on rare earth elements and products, with the apparent aim of exposing US dependence on Chinese rare earths and compelling President Trump to resume negotiations over the two countries’ trade relationship.
China dominates the global production and processing of these materials, and they are critical to all economies, used in everything from phones, to cars, to weapons systems. Hence the widespread panic, particularly in the West, on how to cope and respond. The ploy appears to have enjoyed some near-term success – the expanded rare earth restrictions were subsequently suspended for a year following the resumption of trade talks.
However, other recent examples of foreign policy-driven export restrictions have been less successful – since the mid-2000s, Russia has repeatedly suspended gas supplies to European countries to achieve geopolitical aims; while the threat of disruption has arguably tempered some diplomatic responses to Russian expansionism, the effectiveness of the weapon has diminished over time, particularly as European countries have developed alternative sources of supply. The Russian pivot to supplying China has failed to offset the major economic losses incurred through lost access to European markets.
This got us thinking: what does the historical record tell us about the effectiveness of such ‘resource weaponisation’ (defined here as the imposition of restrictions on resource flows to achieve non-market/geopolitical goals)?
At Resource Resolutions we took a break from our day-to-day work (conflict resolution around resource projects), picked up the history books, and briefly examined the record of such national-level export restrictions over the last 200 years.
We examined 12 major cases of nations weaponising their resource exports to achieve foreign policy goals. And we looked at how it turned out for them – and it turned out to be a very mixed picture. See the summary chart below.
Health warning: this was a rough-and-ready analysis. Historical causes and effects can be difficult to disentangle and interpret.
Nevertheless, three points stand out:
1. Weaponising resource exports is as old as the hills. Throughout history powerful nations have sought to wield influence over others by restricting vital materials they control (see below for a list of cases). Britain did this aplenty in its imperial heyday. In that context, China’s recent weaponization of its rare earths should hardly be a surprise.
2. The tactic of restricting exports has often failed to achieve the immediate foreign policy goals intended by the protagonist. It has often caused severe economic pain for the importing countries, but that has just as often encouraged them to dig in politically. For example, OAPEC’s oil embargo in 1973 failed to achieve its goal of shifting US policy towards the Middle East. Export restrictions can also backfire spectacularly. The US oil embargo on Japan in 1941 upped the ante, triggering Japan’s retaliatory attack on Pearl Harbour.
3. The risk of long-term economic ‘blowback’ (not just foreign policy failure) for the exporting countries is even higher. This was ‘moderate’ or ‘severe’ in 10 of the 12 cases. Over time, importing countries have often been able to develop alternative supplies and supply chains. The US grain embargo on the USSR in 1980 (in response to the Soviet’s invasion of Afghanistan) may have ended up hurting US farmers more than Moscow, which sourced supplies from elsewhere. Russia’s weaponization of its gas supplies to Europe in 2022 has likewise ended up decimating one of its most lucrative export markets.
The lesson for China today? Answering that would require a longer article. But in short: wield this weapon with care!
Weaponising resource exports: an unreliable device that often backfires
More detail on our analysis
RR examined 12 high-profile cases from history (1805 to 2023) of nations that restricted resource exports to achieve foreign policy goals. In each case we looked at whether the weaponisation was: a) effective in achieving the goals and b) resulted in any long-term blowback to the exporting nation.
Case study analysis
Below is a table setting out our analysis for each of the cases we examined. For each, we assess both whether the restriction achieved its immediate foreign policy goal and the longer-term economic consequences—or ‘blowback’—that the exporting nation experienced
Definitions we used:
Effectiveness: did the exporting country’s restriction of its resource exports have the desired effect in achieving the intended foreign policy goals?
Blowback: to what extent did the exporting country’s restriction of its resource exports damage its own interests in the long term (5-10 years or more)?
| Case study | Effectiveness | Effectiveness explanation | Blowback | Blowback explanation |
|---|---|---|---|---|
| British restrict saltpetre exports to pressure Napoleon’s France (1805-1815) | Largely effective | British control of saltpetre (gunpowder ingredient) disrupted French military production. Napoleon’s Continental System failed to stop British smuggling. Britain maintained naval supremacy and developed alternative markets. | Minimal | Limited retaliation. France’s Continental System hurt continental Europe more than Britain. British smuggling networks thrived. Britain’s economy strengthened through Latin American trade expansion. Napoleon’s allies secretly helped British smugglers. |
| British restrict exports to Germany during WWI (1914-1918) | Largely effective | UK blockade reduced German imports by 55% and exports by 53% by 1915. Systematic control of neutral trade through quotas and pre-war statistics prevented circumvention. Fertilizer and food shortages severely weakened German economy. | Moderate | Strained relations with neutral US until 1917 entry. Neutral countries (Netherlands, Scandinavia) pressured into compliance. Germany retaliated with unrestricted U-boat warfare targeting civilian ships. American commercial interests complained about trade restrictions. |
| British imperial export restrictions up to and including WWII for political and military purposes (Rubber, Tin, Minerals) (1919-1945) | Largely effective | Stevenson rubber scheme (1920s) successfully raised prices and controlled production. Strategic mineral restrictions (tin, minerals) protected British military industrial capacity. Maintained control over Commonwealth resources for Allied war effort throughout WWII. | Moderate | US opposed Stevenson rubber restrictions threatening Anglo-American relations. Secretary Hoover criticized British government involvement in commodity control. Pushed US to develop synthetic alternatives and rival plantations. Created tension over war debt repayment. |
| U.S. puts oil embargo on Japan during WWII (1941) | Opposite effect | Instead of forcing Japanese withdrawal from Asia, embargo triggered Pearl Harbor attack. Japan secured Dutch East Indies oil by force. Embargo unified Japanese resolve rather than creating internal pressure for policy change. | Severe | Provoked Pearl Harbor attack destroying eight battleships. Japan conquered Philippines, Malaya, Dutch East Indies killing thousands. Awakened “sleeping giant” leading to Pacific War. American and allied casualties exceeded 100,000 before Midway. |
| Western Bloc strategically restricts exports to USSR during Cold War (1949-1994) | Largely effective | Multilateral coordination among 17 nations created comprehensive technology embargo. Delayed Soviet electronics and computing capabilities by 2-5 years. Forced USSR into costly smuggling operations and reverse-engineering rather than legitimate technology transfer. | Minimal | Minimal unified Western consensus maintained throughout Cold War. USSR denounced the measures as discriminatory but could not retaliate effectively. Occasional allied friction over enforcement but no major economic consequences for West. |
| Soviet Union uses timber and resource exports to exert influence over Eastern Europe (1950s-1980s) | Largely effective | USSR leveraged oil, fuel, and raw material exports to bind Eastern European economies to COMECON. European members depended on Soviet oil at below-market prices during 1970s-80s. Created economic dependence that reinforced political control. | Moderate | Eastern European resentment over economic exploitation. When energy prices changed, COMECON members paid above-market rates for Soviet oil in 1980s. Economic dependency contributed to Eastern European desire for independence after 1989. |
| Zambia restricts copper exports to Rhodesia to oppose white minority regime (1965-1980) | Partly effective | Zambia closed border forcing costly alternative routes for Rhodesian exports. However, Rhodesia survived 14 years with South African support and sanctions-breaking. Zambia suffered worse economically than Rhodesia from closure. | Severe | Zambia’s economy devastated: 30% inflation, $1.5 billion debt, severe shortages. Lost railway revenue, alternative routes collapsed. Zambian copper stockpiled (100,000 tons). Kaunda forced to reopen border 1973 ignoring UN sanctions. |
| OAPEC oil embargo during Yom Kippur War (1973-1974) | Partly effective | Oil prices quadrupled from $3 to $12 per barrel. However, failed primary goal: Israel didn’t withdraw from occupied territories. US oil corporations rerouted supplies mitigating impact. Target states made no significant policy concessions. | Severe | Western countries accelerated development of alternative supplies. Oil-importing developing nations suffered disproportionately. OAPEC unity fractured over embargo duration. Failed to create New International Economic Order. Long-term Western energy diversification efforts. |
| U.S. puts grain embargo on Soviet Union in response to invasion of Afghanistan (1980-1981) | Opposite effect | USSR obtained grain from alternative suppliers (Argentina, Canada, Europe). Embargo hurt American farmers more than Soviet agriculture. Reagan lifted it in 1981 citing ineffectiveness. Soviet forces remained in Afghanistan throughout embargo. | Severe | Political backlash from Midwest farmers was fierce. Reagan reversed policy immediately upon taking office in 1981. Damaged US credibility as reliable trading partner. Argentina and other suppliers gained market share permanently. |
| China restricts rare earth export to Japan following incident near disputed territories (2010) | Partly effective | China never officially announced embargo, making enforcement ambiguous. Japanese imports declined but not as severely as claimed. | Moderate | Japan reduced dependence on China from 90% to 60%. Accelerated Japanese diversification strategy and stockpiling. Increased global concern about Chinese control of rare earths. Narrative of “weaponization” persists regardless of actual evidence. |
| Russia disrupts Ukrainian food exports to apply geopolitical pressure on West (2022-2023) | Partly effective | Russian blockade halted 32.9 million metric tons of Ukrainian grain exports initially. Ukraine developed alternative routes though at higher cost and the move did not fundamentally shift Western positions on Ukraine. | Moderate | Global food prices spiked threatening food security in developing nations. UN criticism and diplomatic isolation increased. Ukraine developed alternative Black Sea corridor despite threats. |
| Russia weaponizes of gas supplies to Europe to counter Western sanctions (2022) | Partly effective | Russia cut Nord Stream 1 gas flows September 2022 after EU sanctions. EU reduced dependency but faced energy crisis. However, Russian LNG imports to EU actually increased. EU avoided total collapse through emergency diversification measures. | Severe | EU accelerated energy transition away from Russian sources. Emergency LNG terminals built in Germany. Russian energy revenues declined long-term. Energy weapon backfired by destroying long-term customer relationships. |
Image: Chinese containers awaiting export – 505960600
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