Space Sovereignty in a Multipolar World: How Tariffs Are Rewriting the Global Space Playbook

The United States is currently facing a significant goods trade deficit of US$1.2 trillion. To address this imbalance, President Donald Trump implemented a 10% baseline tariff on nearly all imports to the United States in April 2025, along with targeted reciprocal tariffs on specific countries. A major contributor to this deficit is China, with the United States facing a trade gap of approximately US$295 billion. Following several rounds of back-and-forth tariffs between the United States and China, tariffs on Chinese goods have now reached 145%, while China has responded with a 125% tariff on U.S. products. Additionally, China has introduced export controls on seven Rare Earth Elements (REEs) in response to U.S. tariffs, intensifying the ongoing trade tensions between the two nations.

Meanwhile, the European Union (EU) has temporarily suspended its retaliatory 25% tariffs for 90 days after Trump postponed his own tariffs, providing room for EU-U.S. negotiations to take place.

The tariffs imposed by President Trump on foreign countries have had a significant impact on various industries and sectors within the United States, particularly on goods imported from China, which totaled US$439 billion in 2024. In that year, while the United States imported a wide range of goods from China, key aerospace-related components such as electrical machinery, equipment and parts, and mechanical appliances were among them. On the other hand, China’s major imports from the United States included aerospace end products, services, and components—most notably aircraft, spacecraft, and their parts.

REEs play a pivotal role in manufacturing aerospace hardware, particularly in developing advanced coatings and insulation materials for space launches. Both the United States and China are adopting reshoring strategies to become more self-sufficient, reducing their dependence on international suppliers for these critical materials. Similarly, other countries—including those in Europe, the United Kingdom, Taiwan, Japan, and the United Arab Emirates (UAE)—are also taking steps to bring key production capabilities closer to home. These efforts reflect a broader awareness of the geopolitical risks tied to supply chain dependencies—highlighted by China’s decision to withhold REE exports to Japan during a 2010 dispute.

United States:

• Strengths: The United States has a fully integrated domestic rare earth producer, MP Materials, capable of supporting REE supply during times of geopolitical tension, such as the ongoing tariff war. However, the company has historically depended on Chinese processors to convert raw materials into finished products. Although MP Materials operates the only REE mine in the United States and previously exported around 85% of its concentrate to China, it has since halted these shipments following China's tariff hike to 125%. Currently, it has initiated strategic stockpiling and is increasing its domestic processing capacity to nearly 50% to lessen reliance on China. These efforts can enhance supply chain security in the short term, while supporting the development of alternative and hybrid solutions for long-term stability. Nonetheless, the aerospace and defense industry still relies heavily on imports of raw materials for space manufacturing—beyond REEs—with key supplies coming from countries such as Ukraine, Taiwan, and others.
• Limitations: The tariffs have disrupted global supply chains and strained trade relations between the United States and China, the world’s leading producer of REEs. In response to U.S. tariffs, China suspended seven REEs exports earlier in April and placed them on an export control list. This may cause U.S. space manufacturing companies to source for other alternatives, which could come at a higher cost. Nonetheless, reshoring efforts come with significant limitations. The United States does not yet have a fully developed industrial base for the extraction, refining, and processing of many REEs on a large scale to accommodate the entire domestic demand. Establishing this capability requires access to raw materials, specialized technical expertise, infrastructure, and environmental approvals—all of which take considerable time and investment to develop. Even if domestic mining ramps up, expanding midstream and downstream processing capacity remains a major challenge and an ongoing bottleneck.

China:

• Strengths: China mines 61% of the world REEs and processes 92% of the global supply, positioning itself as a dominant player in the industry. Hence, it is well prepared to support its domestic space infrastructure manufacturing and maintain self-sufficiency in critical raw materials. As a result, China holds a strategic advantage in REE processing, as the country maintains a centralized role in global REE processing and access to essential resources.
• Limitations: Although China is largely self-sufficient in many sectors, it still relies on foreign sources for critical space technologies, including advanced propulsion systems and related innovations. By implementing export controls, China risks limiting its own access to specialized technologies (such as precision instruments and radiation-hardened chips) that are still predominantly sourced from international suppliers, due to potential reciprocal measures from other countries and strained trade relations.

While the United States and China are predominantly the leading players in the space industry, in terms of total active satellites and their capabilities to manufacture their space infrastructure domestically, several other nations, including Europe, India, Japan, and others, are rapidly advancing in the space race. Ongoing trade tensions between the United States and China, particularly over REEs, have the potential to disrupt supply chains and reshape how these emerging space powers approach space manufacturing and resource security.

• Shift Toward Diversified Supply Chains: While China remains the global leader in REE production and processing, several other countries also contribute on a smaller scale. According to the U.S. Geological Survey (USGS) in 2024, nations such as Myanmar (31,000 metric tons), Australia (13,000 metric tons), Nigeria (13,000 metric tons), Thailand (13,000 metric tons), India (2,900 metric tons), Russia (2,500 metric tons), Madagascar (2,000 metric tons), and Vietnam (300 metric tons) also produce REEs. Additionally, emerging suppliers such as Australia, Brazil, and several African nations are increasingly positioned to play a more significant role in the global supply chain, offering space companies valuable opportunities to diversify their sources of rare earth materials.
• Strengthening International Collaboration: Several international partnerships are currently underway to strengthen supply chain resilience and promote stable trade relationships, particularly in critical minerals. One notable example is the Minerals Security Partnership, which brings together 14 countries to collaborate across the entire value chain of minerals and metals. Both the EU and India are members, offering a platform to explore joint efforts in mineral extraction, processing, and innovation as they expand their roles in the space sector. Another example is Australia's Partnerships in Critical Minerals, involving countries such as India, Japan, the United States, and South Korea, aimed at securing reliable access to essential raw materials. Similar cooperative models could be extended specifically to REE production and processing, enabling countries to collectively reduce dependency on single-source suppliers and support the growth of high-tech industries like space and defense.
• Strategic Adaptation in Emerging Space Nations: Amid ongoing supply chain disruptions and trade disputes, there is potential for a slowdown in innovation among countries working to expand their space capabilities. However, many of these nations are showing strong adaptability in response to the volatility. For instance, Japan has built-up REE stockpiles due to previous trade tensions with China and is investing in REE recycling technologies. India is advancing its domestic capabilities through the India Rare Earth Mission, which focuses on developing local mining and refining infrastructure and capacities. Meanwhile, South Korea is actively working to diversify and strengthen its supply chains to ensure greater resilience.