At the heart of U.S. President Donald Trump’s economic strategy lies a bold effort to isolate China through a selective trade policy dubbed “American Free Trade.” On March 1 of this year, the administration announced a plan to gradually remove tariffs on imports from countries other than China, including allies such as Canada, Mexico, the European Union, and Israel, provided that mutual trade demonstrably contributes to job creation in the U.S. The policy is aimed at pressuring other countries to reduce their dependence on Chinese products and sign bilateral trade agreements with the U.S. For example, on March 15, the U.S. signed a deal with Canada to reduce tariffs on oil and natural gas in exchange for a $10 billion investment in pipeline infrastructure in Alabama, expected to create 3,000 jobs. Japan, in response, agreed to increase imports of American agricultural goods worth $2 billion annually, in exchange for lower tariffs on electronics, benefiting companies like Sony and Panasonic.
This strategy leaves China as the sole target of heavy economic pressure, with tariffs of up to 145% imposed on Chinese goods, including electronics, textiles, and consumer products. China responded with retaliatory tariffs of 125% on American exports such as wheat, soybeans, and vehicles, escalating tensions. “The goal is to disconnect China from global markets and weaken its economic power, while strengthening cooperation with countries willing to work with America,” explained U.S. Treasury Secretary Scott Bassent in an interview with CNN on April 10. Preliminary data shows mixed results: U.S. trade with non-Chinese countries rose by 3% in March 2025, while trade with China fell by 7%, according to the U.S. Department of Commerce. For example, textile imports from China dropped from $15 billion in January to $13 billion in March, while imports from Bangladesh and Vietnam rose by 10%.
Secretary Bassent has been vocal about China’s economic practices, calling the era of free trade “a grand deception.” In a March 12 interview with CBS, he stated: “For years, we believed that opening markets would lead to cooperation, but China didn’t play by the rules. They stole intellectual property worth tens of billions of dollars, subsidized industries that couldn’t compete fairly, and bypassed sanctions — and the West applauded in the name of globalization.” Estimates from the U.S. Department of Commerce place the damage from Chinese intellectual property theft at $50–100 billion annually, severely affecting software, pharmaceuticals, and technology industries.
For example, Qualcomm reported an annual loss of $5 billion due to Chinese copies of 5G technologies, while Pfizer estimated $2 billion in damages from patent theft in pharmaceuticals. Bassent also warned against China’s use of Western technology for military purposes, such as drones, navigation systems, and quantum computing, which was developed through academic partnerships and repurposed for military projects. For instance, in 2024, MIT discovered that a joint research project with Tsinghua University had been used to develop Chinese military AI systems, leading to the termination of the collaboration.
China’s economic vulnerabilities add complexity to the conflict. Since 2010, China’s birthrate has dropped by 30%, with projections for a 26% population decline by 2050, according to the Chinese Academy of Sciences. An aging population, expected to grow by 50% by 2030, threatens China’s pension system, which is already running a $200 billion deficit. According to China’s National Bureau of Statistics, economic growth slowed to 4% in 2024, well below the 6% forecast, and foreign direct investment fell by 15%.
In response, China is deploying tools such as the Belt and Road Initiative, with $100 billion invested in energy projects across Africa and Asia, and increased funding for the digital yuan by 40% in 2024 to challenge the dollar’s dominance. For example, in March, China signed an agreement with Iran to use the digital yuan for oil payments, reducing reliance on the dollar in international trade. Additionally, China signed trade agreements with Brazil and Argentina to increase agricultural imports in exchange for mineral supplies, enhancing its influence in South America.
Mineral Embargo – A Strategic Blow
On March 20, China escalated the confrontation with the Americans by announcing an embargo on importing critical minerals to the U.S., a move described by the Chinese Ministry of Commerce as “a defense of national interests.” China, which controls 60–80% of the global supply of rare earth minerals and essential raw materials like lithium, cobalt, neodymium, dysprosium, and tungsten, imposed severe restrictions on shipments to the U.S., redirecting them to friendly nations such as Russia, India, Pakistan, and South Africa. These minerals are the foundation for producing electric vehicle batteries, AI technology chips, wind turbines, advanced defense systems, and electronic consumer products.
China’s dominance in rare minerals began in the 1980s and 1990s, when the country invested hundreds of billions in mining projects. At the same time, Western countries, including the U.S., nearly ceased domestic mining due to high costs and strict environmental regulations. By 2025, China was producing about 85% of the world’s neodymium and about 70% of its lithium, while the U.S. relied on imports for approximately 80% of its needs in this field, according to the U.S. Geological Survey (USGS). The current embargo continues a trend that began in 2010, when China restricted mineral exports to Japan during a territorial dispute, demonstrating its ability to leverage economic power as a geopolitical weapon. In 2010, neodymium prices soared by 300% within three months, and the current embargo is expected to cause a similar increase.
The effects of the embargo are immediate and severe. USGS estimates indicate that production costs in the U.S. renewable energy and semiconductor industries may rise by 20–30% by the end of 2025. Electric vehicle battery prices—critical to companies like Tesla and General Motors—have risen by 15% since the announcement, with Tesla reporting an average increase of $200 per battery. General Motors, which manufactures the Chevrolet Bolt, raised the model’s price by $2,000 in March 2025, resulting in a 10% drop in sales. The development of green technologies, such as wind turbines and solar panels, has also been affected, with an estimated 10–12% slowdown in new projects. For example, Vestas, a wind turbine manufacturer, reported three-month delays in projects in California due to a neodymium shortage. In contrast, First Solar, a solar panel producer, reported an 8% increase in production costs.
The defense industry, which depends on minerals for missiles and radar systems, reported concerns about shortages, with companies like Lockheed Martin and Raytheon warning of production delays of up to six months. The Javelin system, for instance, relies on rare earth minerals for warhead production, and the U.S. military estimated that the existing inventory would last only three months without alternatives. Additionally, advanced radar systems like Aegis, installed on U.S. Navy ships, require tungsten, 60% of which comes from China. According to a Pentagon report published this year, a tungsten shortage could delay ship production by 12 months.
Treasury Secretary Bassent called the embargo “further proof of China’s intent to harm our economic sovereignty” in an interview with Fox News on March 25. He stated that China is using its control over the global supply chain to pressure the U.S. and pledged that the administration would work to reduce dependence on Chinese minerals. In an immediate response, an emergency plan titled “American Supply 2025” was launched, including a $15 billion investment in new mining projects in states like Nevada, Montana, Alaska, and Wyoming, focusing on minerals such as lithium (in Nevada’s Smoky Basin) and cobalt (in Montana). The goal is to produce 10% of U.S. needs domestically by 2028. Agreements with Australia, which holds 15% of the world’s rare mineral reserves, and with Canada were signed to establish an alternative supply chain, with a joint investment of $5 billion by 2026. For example, Australian company BHP committed to supplying 20,000 tons of lithium annually to the U.S. starting in 2026, while Canadian company Teck Resources will supply 5,000 tons of cobalt.
However, the challenge is complex. Experts such as Professor John Lewis of Stanford University warn that the transition to independent production will take at least 3–5 years, as developing new mines requires environmental permits, infrastructure, and workforce training. For example, a new lithium mine in Nevada, created by Lithium Americas, is expected to produce 40,000 tons per year but won’t reach full capacity before 2027. In the meantime, the U.S. relies on existing stockpiles (about 40,000 tons of rare minerals in strategic reserves) and imports from countries like Brazil and Malaysia, where increased mining activity has begun. The administration is also considering counter-sanctions against China, including restrictions on the export of American technologies, but is wary of mutual damage to global trade. For instance, restrictions on exporting advanced chips from Intel and AMD to China could cost these companies $10 billion annually, resulting in 5,000 job losses in the U.S.
International reactions to the embargo vary. India, which depends on China for 50% of its mineral needs, announced a $3 billion mining plan in cooperation with Australia. Africa, where China controls 60% of cobalt mines, has seen increased Western investments: France and the UK invested $2 billion in mines in Congo and Zambia in March 2025. However, Russia and China strengthened their cooperation with a March 30, 2025, agreement to expand mineral trade in exchange for military technology, raising concerns about a united Eastern power bloc.
China and Iran: Bypassing U.S. Sanctions
Trade between China and Iran, estimated at $30–40 billion annually in 2024, has become one of the cornerstones of the Iranian economy under U.S. sanctions. In March 2025, Iranian oil imports to China peaked at 1.71–1.8 million barrels per day, up from about 1.2 million barrels in 2017, making China the buyer of approximately 90% of Iran’s oil exports. Behind these numbers lies a sophisticated system in which China, the world’s largest oil consumer, circumvents U.S. sanctions using methods that render this trade nearly untraceable. This is not merely an economic issue—it is a strategy combining maritime deception, covert payments, and networks of intermediaries, exploiting vulnerabilities in the global financial system.
At the heart of this system is the “shadow fleet,” a network of tankers operating like ghosts at sea. Ships such as the NICHOLA, RESTON, and NYANTARA—many registered under flags of countries like Panama or Cameroon—employ advanced tactics to conceal their cargo. They turn off their identification transmitters (AIS) to disappear from tracking systems, conduct ship-to-ship oil transfers in open waters—sometimes near ports like Singapore—and arrive at Chinese ports like Huaying Daya Bay carrying millions of barrels. In January, for example, the NICHOLA unloaded about one million barrels of Iranian oil following a covert sea transfer, while being listed as part of the sanctioned shadow fleet. Ownership of these tankers is often opaque and hidden behind shell companies, making it difficult for the U.S. to trace them. The lack of cooperation from certain countries allows these ships to continue operating despite sanctions.
To complete transactions without exposure to the U.S. financial system, China relies on yuan-based payments through smaller banks such as the Bank of Kunlun, which has been under sanctions since 2012. These banks do not require access to SWIFT or the dollar, making them nearly immune to American penalties. Between 2020 and 2023, for instance, the Chinese refinery Shandong Shengxing Chemical transferred about $800 million to China Oil and Petroleum Company Limited, a front company for Iran’s Revolutionary Guard Corps, via such financial channels. Yuan payments allow Iran to accumulate foreign reserves and serve China’s goal of internationalizing its currency—a step toward reducing reliance on the dollar and weakening the U.S.’s ability to impose sanctions.
Simultaneously, small refineries in Shandong province, known as “teapots,” have become key players in this trade. After state-owned oil companies like Sinopec halted purchases of Iranian oil due to fear of sanctions, these refineries filled the gap. Today, they are responsible for about 90% of China’s Iranian oil imports, purchasing billions of dollars’ worth, sometimes through Revolutionary Guard front companies. Shandong Shengxing, for example, purchased over $1 billion worth of oil by 2025, including from tankers like the BRAVA LAKE. These refineries operate outside the U.S. financial system, making enforcement nearly impossible and allowing China to maintain a steady flow of cheap oil.
A critical part of this strategy is the rebranding of Iranian oil, a process that disguises its origin as coming from countries like Malaysia or Gulf states. Open-sea transfers—often near ports like Malacca or Singapore—enable changes in documentation so that official records do not cite Iran as the source. In March 2025, as China imported nearly two million barrels per day from Iran, most of this oil was rebranded as Malaysian, according to Kpler and Vortexa data. This ploy allows China to claim it is not violating sanctions while continuing to benefit from discounted oil, sometimes sold at 10–20% below market prices.
A network of intermediaries and front companies completes the system, obscuring the trail of oil and payments. Firms like Astrid Menks Limited and Canes Venatici Limited, registered in Hong Kong, serve as official owners of shadow fleet tankers, concealing the true identities of the operators. Operating under a veil of secrecy, this network makes it difficult for the U.S. to trace financial flows and identify those involved. The result is a near-impenetrable system in which China and Iran continue trading oil almost uninterrupted, evading the restrictions imposed by the U.S.
This trade is more than commercial—it is a geopolitical strategy. China is securing a cheap energy source and strengthening its position against the U.S. while helping Iran withstand Western pressure. This system, combining maritime subterfuge, secretive payments, and intermediary networks, illustrates how much China is willing to protect its interests, even when defying American sanctions.
The Climate Crisis as a Geopolitical Tool
A critical backdrop to Trump’s policy is the Western world’s addiction to green energy, especially in Europe and the U.S., a trend sharply criticized by Senate Republicans as misguided. Even though current technologies such as lithium-ion batteries and wind turbines are not capable of entirely replacing fossil fuels either quantitatively or economically (renewable energy accounted for only 15% of global consumption in 2024, according to the International Energy Agency), progressive agendas in the West continue to push for massive investments in the sector. “The green agenda is not about facts, but about stereotypes and image,” Senate Republicans said in a Fox Business interview on April 18, “The West is investing trillions in immature technologies while still relying on oil and gas—and China is laughing all the way to the bank.”
The focus on green energy, driven by public pressure and international agreements such as the 2015 Paris Agreement, has created a heavy dependence on rare minerals dominated by China, such as lithium and cobalt. Europe, for example, invested €300 billion in green projects between 2020 and 2025, but 70% of its raw materials come from China, according to a 2024 Eurostat report. Germany, leading the green transition in Europe, is 80% dependent on Chinese lithium to produce electric vehicle batteries for companies like Volkswagen and BMW. Under previous administrations, the U.S. followed suit, allocating $200 billion to renewable energy, but it faces similar dependence. This dependency has left the West vulnerable, especially as China exploits the “climate crisis” to its advantage. China is exempt from the strict carbon emission standards of the Paris Agreement, allowing it to build over 250 coal power plants since 2020, according to Global Energy Monitor, while presenting itself as a “green leader” by exporting $50 billion worth of batteries and solar panels in 2024.
China uses the climate crisis as a geopolitical tool, expanding its economic influence over developing nations in Africa and Asia through the Belt and Road Initiative, which includes $100 billion in energy project investments in exchange for resource access. For instance, China invested $5 billion in lithium mines in the Congo, securing control over 60% of the world’s material supply. Additionally, China signed a deal with Zimbabwe in March 2025 to build a $1 billion battery factory that will supply 20% of Europe’s electric vehicle batteries. It also increased digital yuan funding by 40% in 2024 to support this trade and challenge the dollar’s dominance.
For example, China persuaded Saudi Arabia to use the digital yuan for 10% of its oil transactions, reducing dollar use by $2 billion annually. “While the West sleeps at the cradle of its agendas, China is building an empire on the back of our resources,” Senate Republicans warned in an interview with CNN. The administration sees this as an opportunity to redirect U.S. policy toward local production of fossil energy and minerals, criticizing Europe’s “green hypocrisy”—preaching sustainability while relying on Chinese supply chains.
A historical comparison shows that the West has already faced similar dependence. In the 1970s, the OPEC oil crisis exposed the West’s vulnerability to Arab oil, leading to nuclear and coal energy investments. Senate Republicans argue that the Chinese embargo is the “oil crisis of the 21st century,” and call for a rapid transition to domestic production.
