American soybean farmers aren’t the only ones feeling the impact of overreliance on China. Many U.S. manufacturers face a similar, though more complex, challenge: dependence on Chinese materials and components critical to production.
China typically purchases around half of U.S. soybean exports, giving it leverage to influence the market — a power it exercised extensively this year. For manufacturers, the stakes are even higher. China is the dominant or sole supplier for a range of vital materials, from rare-earth minerals to semiconductors and pharmaceutical ingredients. Rare-earth minerals, essential for high-tech products such as smartphones, lasers, and radar systems, saw export restrictions this year due to U.S. tariffs. Although these restrictions were suspended for a year as part of a recent trade deal, the broader issue of supply dependence remains.
China also controls production of graphite, gallium, germanium, magnesium, tungsten, permanent magnets, and polysilicon. These materials are critical: graphite is needed for lithium-ion batteries, gallium and germanium for semiconductors and fiber optics, tungsten for industrial tools, and numerous active pharmaceutical ingredients are sourced from China. Even when U.S. companies import drugs from India, many of India’s key ingredients originate in China. Beyond raw materials, less advanced semiconductors for autos and consumer products also rely heavily on Chinese production.
This overdependence is no accident. China has strategically sought to dominate global supply chains through subsidies, tax breaks, low-interest loans, and protection from foreign competition. The resulting economies of scale have allowed Chinese companies to flood international markets, undercut competitors, and expand influence over both upstream materials and final products. Rare-earth markets illustrate the consequences: past attempts to revive U.S. production were thwarted as China flooded the market, forcing Western producers into financial distress and selling assets to Chinese buyers.
U.S. policymakers recognize the risks. Both the Biden and Trump administrations have pursued industrial policies to bolster domestic manufacturing, through subsidies, tariffs, and legislation such as the Chips Act. Some companies are diversifying by relocating production from China to the U.S. or other countries. Yet China’s scale advantage and dominance in advanced technologies make full mitigation challenging. Experts argue that coordinated efforts among like-minded nations are essential to counterbalance China’s influence, a strategy complicated by U.S. tariffs on allies.
For U.S. soybean farmers, the solution is relatively simple: seek new markets beyond China. For American manufacturers, overcoming the deep structural dependence on Chinese materials and components is a far more complex and long-term challenge.
