The modern day relationship between the U.S. and China is very tense and uneasy. In recent years, aggressive tariffs and geopolitical disputes like the war in Iran have pushed tensions to a boiling point. In response to U.S. economic pressure, Beijing has begun restricting exports of critical rare earth minerals. While the rest of the world fears a slide into a major conflict, a look at economic reality shows us why neither nation can afford to go to war with each other.

Since the founding of the People's Republic in 1949, diplomatic ties between Washington and Beijing have never seen eye to eye ideologically. That being said, over the last 4 decades, mutual economic interests have created a deep independence. With normalized trade relations and massive labor outsourcing, China's industrial sector grew rapidly by the 2000s. Because of this American consumers relied on the low cost Chinese goods while Chinese manufacturers depended on American markets, technology and investment.

Today, we see this in the supply chains for critical resources like rare earth minerals. Modern manufacturing requires specialized elements like neodymium, dysprosium and terbium to assemble everything from cell phones and electric vehicles to defense systems and much more. Despite a new domestic focus, the United States still sources around 70 percent of its rare earth minerals and metals directly from China.

Although the U.S. holds an estimated reserve of nearly two million metric tons, extraction is only part of the solution. China controls more than 90 percent of the world's refining capacity for these materials. Domestic processing facilities and other alternatives require a massive investment and years of clearance before matching Chinese production. A total cutoff would kill American manufacturing while simultaneously damaging China's revenue.

The cycle of tariff escalation and retaliation shows that trade is a major fixture of modern diplomacy in our current world and a potential buffer between two countries and war. Even when diplomatic dialogue becomes harsh, both administrations only go so far before returning to the negotiating table to prevent total economic death. The United States and China will be geopolitical rivals but their shared reliance on each other ensures that diplomacy will be the answer for the foreseeable future.