China's Metals Grip Could Lift US, EU Prices 1 Point Over 2 Years
Updated
Updated · Financial Times · Jul 28
China's Metals Grip Could Lift US, EU Prices 1 Point Over 2 Years
3 articles · Updated · Financial Times · Jul 28
Summary
A one-standard-deviation supply hit to electrification metals would raise cumulative consumer prices by about 1 percentage point in the US and EU over two years, economists found.
The effect is roughly twice that of a comparable fossil-fuel shock and lasts longer because mineral processing chains are concentrated, thin and slow to replicate.
China is the top refiner of nearly every key electrification metal, with the leading refining country holding an average 72% share in 2025, up from 70% in 2023; battery-grade graphite disruption alone could endanger more than $300bn of output outside China.
The NBER paper says Beijing built a hub-and-spoke system through strategic financing in exporter countries despite limited domestic resources, shifting energy-security dependence from hydrocarbons to mineral processing.
The US has launched a $10bn Exim-backed critical minerals reserve called Project Vault, while G7 leaders have so far focused diversification commitments mainly on rare earths and magnets.