How America Can Counter Chinese Coercion

Foreign Affairs | Theodore Bunzel, Edward Fishman, Addar Levi

China deployed extensive economic countermeasures against the United States in April 2025 by imposing matching tariffs alongside strict export controls on rare-earth elements. This retaliation rattled global bond markets and disrupted automotive supply chains, forcing Washington to seek an ongoing trade truce. Beijing expanded its geoeconomic leverage in November 2025 against Tokyo following comments by Japanese Prime Minister Sanae Takaichi.

Takaichi had warned that a potential Chinese blockade of Taiwan constituted a survival-threatening situation warranting the deployment of Japan's Self-Defense Forces. In response, Chinese authorities placed severe trade bans on Japanese commerce, demonstrating Beijing's readiness to weaponize supply chain dependencies against U.S. security allies. Critical mineral choke points remain central to this strategy. By targeting both primary trade partners and key regional allies, Beijing leverages its dominant industrial market share to deter western security intervention in East Asia. The resulting economic vulnerability highlights structural gaps in allied collective defence mechanisms across the Indo-Pacific theater.

Comment

Beijing's leverage over rare-earth elements exposes structural asymmetries between unilateral tariff countermeasures and targeted supply-chain embargoes. While retaliatory tariffs in April 2025 impacted broad commercial trade with the United States, targeted mineral controls against Japan's manufacturing sector directly strained defense-adjacent supply chains. Chinese processing dominance in heavy rare earths allows Beijing to transform global industrial integration into a localized instrument of economic pressure.

This coercion mechanism mirrors Beijing’s 2010 rare-earth export restrictions against Tokyo following maritime friction near the Senkaku Islands. Unlike broad trade tariffs, critical material embargos target narrow bottleneck vulnerabilities in specialized defense production, such as permanent magnets used in precision-guided munitions and naval turbines. Consequently, Beijing’s control over Baotou processing hubs converts commercial material dependencies into an effective counter-containment tool against allied military postures.

Strategic Question for Discussion

Which carries greater weight in mitigating Chinese economic coercion—building redundant domestic processing capacity or establishing binding multilateral supply-sharing agreements during crisis scenarios?

The available evidence points toward domestic processing redundancy as the more decisive long-term counterweight, given the time lag inherent in organizing multilateral emergency allocations. While supply-sharing agreements offer political alignment, processing bottlenecks at sites like Baotou demonstrate that physical refining capacity ultimately determines operational resilience under embargo conditions.

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