In a rapidly evolving global trade landscape, China’s tightening grip on the rare earth market could be the key catalyst for a strategic shift in the India-US relationship. As Beijing’s new export controls on critical minerals — including rare earths, which are essential for technology, defense, and green energy — begin to stir global unease, the United States seems poised to further solidify its alliances with countries like India, potentially pushing the India-US trade deal toward the finish line. However, the timing of these developments remains critical as both countries navigate their complex relationships with China.
A Rare Earth Squeeze: The New Era of Economic Warfare
On October 14, 2025, in a televised interview, US Secretary of the Treasury Scott Bessent characterized China’s recent export restrictions on rare earth minerals as a direct challenge, calling it “China versus the rest of the world”. These export controls are part of a broader set of economic moves by China to maintain dominance over key minerals that are indispensable to the global tech industry, defense systems, and the burgeoning green energy transition.
The rare earth elements are crucial in the production of smartphones, electric vehicles, solar panels, wind turbines, and military technologies. China, which controls over 60% of the global supply, has long leveraged its monopoly over these minerals as a tool of economic influence. In the last few years, China has employed this leverage to weaponize trade against both the United States and its allies, making the global market increasingly vulnerable to its policies.
China’s export restrictions, announced in mid-October 2025, have sent shockwaves through the global supply chain, threatening to disrupt the manufacturing processes of industries ranging from electronics to defense. The US has responded by reiterating its stance on countering China’s economic tactics, highlighting the importance of diversifying supply chains and fostering stronger alliances with other democracies.
India’s Critical Role: From Trade Partner to Strategic Ally
In his interview, Bessent also emphasized that the US expects strong support from Europe, India, and other Asian democracies in responding to China’s growing trade dominance. For India, which has traditionally walked a fine line between maintaining strong economic ties with China while also deepening its strategic relations with the United States, the current scenario represents both a challenge and an opportunity.
India, a critical partner in the Indo-Pacific region, is increasingly seen by the US as a cornerstone in counterbalancing China’s rise. Despite recent trade tensions, including concerns over India’s tariffs and market access, Washington continues to regard New Delhi as an indispensable ally in the broader geopolitical struggle with Beijing. This shift is particularly relevant given India’s growing geopolitical clout and the increasing recognition of its importance in global supply chains, especially in sectors like technology, defense, and energy transition.
India’s response to China’s rare earth squeeze is expected to play a critical role in shaping the future of US–India trade relations. For example, India’s ability to diversify supply chains for critical minerals like lithium, cobalt, and rare earths could be pivotal. With its vast mineral resources in places like Ladakh and Jharkhand, India has the potential to become a key player in the global rare earth supply chain, offering an attractive alternative to China’s monopoly.
In recent years, India has been increasing its focus on self-reliance in critical sectors through initiatives like the Atmanirbhar Bharat (Self-Reliant India) campaign. Now, with China’s export restrictions shaking up the global order, India’s commitment to economic independence could take on an even more pronounced role, aligning its objectives with those of the US.
The India-US Deal: Moving Closer to the Finish Line
The India-US trade deal, which has been in the works for several years, may finally be approaching a critical turning point. Bessent’s comments indicate that the US is pushing forward with its strategic objectives of securing critical supply chains and countering China’s trade dominance. India’s participation in these efforts could accelerate the finalization of the trade deal, particularly in sectors like technology, defense, and renewable energy.
There is a growing recognition that India holds a central position in global geopolitics, not just as a market but also as a key partner in creating alternative supply chains to challenge China’s dominance. The US-India deal could serve as a significant turning point in this larger geopolitical struggle, positioning India as a critical player in both global economics and geopolitics.
While the India-US trade relationship has been mired in challenges, including issues like intellectual property protection, market access, and tariffs, recent developments related to China’s rare earth monopoly and America’s focus on strategic alliances are likely to push both countries toward a more robust agreement. With China’s export controls and rising tensions in the Indo-Pacific, India and the US could find more common ground, moving the deal closer to completion.
Challenges Ahead: The Timing of Geopolitical Moves
Despite the growing momentum toward a potential deal, the timing of these developments is crucial. Both countries are at a delicate juncture, where domestic politics, global trade dynamics, and geopolitical alliances are intersecting.
For India, the challenge lies in balancing its domestic economic interests with its international commitments. While there is a clear strategic benefit in aligning with the US in the face of China’s trade aggressions, India must carefully manage its relations with both Beijing and Washington to avoid being caught in a global tug-of-war.
The US, on the other hand, must navigate its trade war with China, which has only intensified in recent months, while ensuring that its support for India does not come at the expense of broader global alliances. As global economic shifts unfold, the US must ensure that India’s strategic importance is reflected in a fair and mutually beneficial trade deal.
Looking Ahead: Strategic Alliance or Tactical Move?
While the India-US trade deal remains a work in progress, the rare earth crisis presents a window of opportunity for both countries to solidify their alliance in a rapidly shifting global economy. As the China-US trade war escalates, India’s role in creating a diversified supply chain and countering Chinese dominance is likely to become more critical.
The future of the India-US trade relationship may depend largely on how both countries respond to the challenge of rare earth monopolies, technology supply chains, and geopolitical maneuvering. In this context, the proposed trade deal may be not just an economic agreement, but a geostrategic move to position both nations as key players in a new global order defined by economic self-sufficiency and strategic alliances.
As the situation unfolds, both countries will need to consider not just the economic rewards of a strengthened partnership, but also the geopolitical risks involved in such a delicate balancing act.
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