When Washington warns of “decoupling” and Beijing answers with silence, Europe holds its breath. The latest clash over rare earths and critical minerals has reopened an old wound: the continent’s dependence on others for its prosperity. What began as a trade dispute between the United States and China now threatens to unmake the foundations of European industry and strategy alike.
Scott Bessent, the new U.S. Treasury Secretary under Donald Trump, stood beside the trade representative Jamieson Greer in Washington this week and declared that if China chose to be “an unreliable partner,” the world would have to decouple. His statement was meant for Beijing, but its echo reached Brussels, Berlin, and Paris with uncomfortable clarity. Because if the world divides again, Europe will have to choose a side.
The minerals that built modernity
China’s decision to impose export controls on rare earths and other critical minerals has reminded everyone where the raw materials of modern life truly come from. These minerals power the electric car, the wind turbine, the semiconductor, the guided missile. They are the invisible arteries of both the green transition and the digital revolution.
Beijing’s new regime, effective from December, will require companies exporting any product that contains even a trace of these minerals to seek a government licence. It is a bureaucratic detail with seismic consequences. By controlling the gate, China controls the flow.
In the 1970s, OPEC used oil to remind the West of its vulnerability. Half a century later, China is using rare earths to do the same. The message is blunt: if you restrict our access to chips and technology, we can restrict yours to the elements that make them work.
Europe knows this message well. Germany’s carmakers rely on Chinese-processed rare earths for electric motors. France’s aerospace sector depends on Chinese magnets and alloys. Even the smallest European battery startup is linked to supply chains that end in Inner Mongolia or Sichuan. The idea of “de-risking,” the polite Brussels term for gradual diversification, sounds increasingly naive when one country refines more than 80 percent of the world’s rare earths.
Washington’s new weapon
Donald Trump’s return to the White House has brought back a style of economic diplomacy that Europe hoped was over. His administration’s reaction to Beijing’s export controls has been immediate: threats of a one-hundred-percent tariff on Chinese imports by November 1. Bessent and Greer framed the Chinese decision as an act of “economic coercion against every country in the world.”
This is not protectionism in the old sense. It is a strategy of pressure, designed to force Europe and others to align behind Washington’s confrontation. For Trump, tariffs are not just a trade tool but a geopolitical one. If China uses minerals as leverage, America will use access to its market as a counterweight.
Europe, however, cannot afford either confrontation or submission. Its industries depend on Chinese materials, yet its security relies on American guarantees. Every escalation between the two giants leaves the continent more exposed. Trump’s tariffs will raise costs for European manufacturers. China’s restrictions will slow production. The dream of strategic autonomy feels distant when your factories and alliances are both in someone else’s hands.
The fragile idea of strategic autonomy
Brussels speaks often of “sovereignty,” of a Europe able to decide its own fate. The phrase has become a ritual, repeated from Paris to Prague. Yet behind it lies a truth too uncomfortable to state plainly: the European Union has built its prosperity on dependencies it cannot quickly unwind.
Energy was the first lesson. When Russia invaded Ukraine, Europe discovered how its energy transition had been financed by cheap Russian gas. Now it risks a second lesson, industrial dependency on China. From solar panels to lithium batteries, the green agenda has become reliant on Beijing’s supply chains.
The European Commission’s Critical Raw Materials Act, launched this year, aims to reduce that dependency by sourcing, mining, and recycling more within Europe. It is an ambitious plan. It is also a slow one. Opening new mines in Sweden or Portugal takes a decade. Building refining capacity requires capital, expertise, and environmental consensus, three things Europe rarely possesses simultaneously.
So when Washington demands unity against China, and Beijing offers cheap access in exchange for silence, Europe hesitates. Strategic autonomy begins to sound like a luxury.
The illusion of de-risking
European officials prefer to speak of “de-risking” rather than “decoupling.” The word suggests moderation, a calm middle ground between panic and provocation. Yet the reality is starker. There is no gentle way to reduce dependency on a country that dominates the supply of materials essential to every industrial sector.
In truth, de-risking has become a language of denial. It allows policymakers to signal caution without accepting the cost of change. The European Investment Bank still funds battery plants that rely on Chinese components. National governments continue to court Chinese investors while warning of “strategic vulnerability.”
Beijing understands this contradiction perfectly. Its Ministry of Commerce dismissed Washington’s accusations as “exaggeration and panic” and promised that all applications for “compliant, civilian use” would be approved. The phrase was crafted to divide the West: it invites Europe to believe that the new rules will hurt only America’s high-tech sector. For now, many in Brussels are willing to believe it.
Industrial Europe at a crossroads
No continent has more to lose from this standoff than Europe. Its economic model is built on open trade, precision manufacturing, and complex supply chains. Each of these depends on predictability. Each is now under threat.
Germany’s automotive giants face a double bind. They are under U.S. pressure to move production away from China, yet the electric engines that power their future depend on Chinese magnets and lithium. Volkswagen, BMW, and Mercedes have all expanded their joint ventures in China precisely when Washington is urging retrenchment.
France, by contrast, has taken a more strategic tone, arguing for a European industrial policy that can withstand both American and Chinese coercion. But even Paris cannot ignore economic reality: its green-tech sector is tiny compared with China’s, and its nuclear industry still relies on imported components.
Southern Europe watches the debate with weary detachment. For Spain, Italy, and Portugal, the threat is less immediate but no less real. If the price of rare earths spikes, the entire European manufacturing ecosystem will feel it, from car batteries in Stuttgart to solar farms in Alentejo.
The diplomatic theatre
As Washington and Beijing trade accusations, their diplomats still talk of meetings and ceasefires. Bessent expects Trump to meet Xi Jinping at the APEC summit in Seoul later this month. Optimists hope for a pause, perhaps a delay in China’s export regime or another extension of the U.S. tariff truce. But even if both sides step back temporarily, the logic of confrontation has already taken hold.
The tone of U.S.–China diplomacy has changed. No longer is it about integration or compromise. It is about control and resilience. The Geneva deal earlier this year, which momentarily stabilized relations, is already eroding. Both capitals see the other as structurally hostile.
For Europe, this creates a paradox. It relies on the stability of a system that no longer exists. Its diplomats speak of multilateralism while its partners prepare for blocs. The world order that made the European Union possible, open markets, shared rules, the separation of economics from politics, is vanishing.
Europe’s quiet dependence
There is a silence running through European politics whenever rare earths are mentioned. It is the silence of recognition. Leaders know that without Chinese supply chains, the green transition will stall, the digital economy will slow, and the dream of reindustrialization will falter.
The European Central Bank warns that a prolonged disruption could shave several points off Eurozone growth. The International Energy Agency estimates that global demand for critical minerals will quadruple by 2040. Europe has neither the mines nor the infrastructure to meet it.
Yet even in this moment of vulnerability, the continent hesitates to speak with one voice. The northern states emphasize fiscal discipline and competition. The south calls for public investment and protection. The east seeks American security against Russia and sees any criticism of Washington as betrayal. The west, caught between them, dreams of a Europe that no longer needs to choose.
Learning from the past
There is a certain irony in Europe’s predicament. The European project was born from scarcity: coal and steel shared to prevent future wars. Now it faces a new scarcity that could divide it once again.
In the 1950s, integration meant pooling resources. In the 2020s, it may mean pooling vulnerabilities. A European rare-earth strategy would require collective investment, long-term planning, and political courage, the very things national governments find hardest.
The lesson from the energy crisis of 2022 is clear. Diversification works, but only if it begins early and proceeds decisively. Within two years, Europe reduced its dependence on Russian gas by more than half. But it did so at enormous cost and under pressure of war. It cannot afford to wait for a similar shock in the mineral markets.
A new realism
The rhetoric of decoupling and de-risking hides a deeper truth: globalization is not ending; it is hardening into regions. Supply chains are being redrawn around political lines. The age of efficiency is giving way to the age of security.
For Europe, realism means accepting that neutrality is no longer an option. It must prepare for a world in which the U.S. and China view economic policy as an instrument of power, not prosperity. The choice is not whether to pick a side, but how to protect its interests when both sides are willing to use leverage.
This does not mean abandoning ideals. It means defending them with resources, not just declarations. The capacity to mine, refine, and innovate within Europe is now a matter of sovereignty. The power to produce is the power to decide.
The road ahead
By the end of the year, China’s export controls will be in force. Trump’s tariffs may follow. Europe’s response will define its role in the next decade.
If it continues to rely on others to provide what it consumes, it will remain a market, not a power. If it confronts the challenge head-on, through coordinated industrial policy, shared investment, and a willingness to act collectively, it may yet turn dependency into strength.
Scott Bessent’s warning about decoupling was meant as deterrence. But it has forced Europe to face a question it has long avoided: what happens when interdependence, the very thing that once guaranteed peace, becomes the weapon of conflict?
The answer will not come from Washington or Beijing. It must come from Europe itself, or not at all.
