A simple visit to an obscure factory by Chinese President Xi on Monday is all it took to raise the specter that China could be contemplating cutting off supply of critical materials to the U.S. and potentially crippling large swathes of its industries. Also, fueled by political innuendo in Xi’s recent call for a new “Long March” in reference to a key founding tenet of the Chinese Communist Party, speculators are growing increasingly wary of Chinese export restrictions to the U.S., including rare earth minerals.

As the world’s largest producer, the Middle Kingdom has a vice-like grip on rare earths supply.

Rare earth minerals, also known as the “vitamins of chemistry”, are a group of elements used in the manufacture of a wide range of equipment in small doses to produce powerful salutary effects. These minerals are extensively used in smartphones, batteries, turbines, lasers, electromagnetic guns, missiles, advanced weapon sensors, stealth technology and jamming technology. For instance, lanthanum is used in lighting equipment and camera lenses; neodymium in hybrid vehicles; praseodymium in aircraft engines; europium in nuclear reactors and gadolinium in MRIs and X-rays. Oil refiners also use rare earth catalysts to process crude oil into gasoline and jet fuel.

China produced more than 90 percent of the world’s supply of these critical elements over the past decade, though its share was lower at 71.42 percent last year.

In 2018, the U.S. Geological Survey identified 35 minerals critical to the country’s economy and national security. America is heavily dependent on imports of these minerals, producing less than a tenth of the world’s supplies and importing half of what it consumes. It clearly highlights the U.S.’ soft underbelly.

Not surprisingly, rare earth minerals are some of the few products that escaped Trump’s latest tariffs.

What’s the big deal?

President Trump’s executive order that last week banned Huawei, China’s largest tech company, from doing business with U.S. companies might be the final straw that forces the Asian nation into sterner action (though Huawei did get a stay of execution for 90 days).

Once again, Beijing has been dealt a strong geopolitical hand and it’s probably going to weigh the weapons in its arsenal that it can use to hit back—and rare earths are some of the most powerful. As usual, Beijing has maintained a deafening silence on the matter, letting its animated states media do most of the talking:

“It is normal that the top leader investigates relevant industrial policies. I hope everyone can interpret it correctly.”

Meanwhile, the Global Times has gloated, “U.S.’ need of rare earths is an ace on Beijing’s hand”.

At this point it’s still merely speculation, but supposing the worst actually happened and Beijing went for the so-called “nuclear option”?

In the short-term, things would get pretty murky for hordes of U.S. industries.

As cited by Reuters, Ryan Castilloux, founding director of strategic metals consultancy at Adamas Intelligence, says that autos, renewable energy, defense, and technology would all suffer. There are no hard figures available yet for the extent of economic damage, but the consensus seems to be that if China turns off the tap of critical materials it would directly affect large chunks of the U.S. economy.

It would essentially be like dialing the tech industry a few decades back.

It’s only natural to wonder why the United States has left itself exposed this way.

Actually, the country was the biggest producer of rare earths from the 1960s to the 1980s at its Mountain Pass mine in California. The processing plant was shut down on environmental concerns in 1998 and the entire site was mothballed in 2002 to keep in toxic wastewater. In short, the country’s position has been: rare earths mining is a costly, messy, and dangerous affair; why not let someone else do it?

To make matters even worse, the U.S. mine still relies heavily on Chinese firms for processing–again due to environmental concerns.

An ace in Beijing’s hand?

Not everybody is on the same page, though, with some experts unconvinced that the chilling scenario described here would necessarily unfold that way.

Tim Worstall, a former rare earths trader, told the Verge that a China embargo would only lead to temporary pain for the United States, which it would be able to solve before too long. Critical operations like military and defense likely have more than enough stockpiles to outlast such a ban.

It turns out that not all rare earths are that rare, with USGS (United States Geological Survey) classifying 17 of those elements as “moderately abundant” with significant deposits in the United States, Canada, Brazil, India, and Australia. The major problem for the U.S. would not be lack of those resources per se, but how quickly it can ramp up production at its existing facility—and possibly scale up.

Eugene Gholz, an associate professor the University of Notre Dame and a rare earth expert, also told the Verge that a similar spat between China and Japan offers valuable lessons. In 2010, China cut off exports of rare earths to Japan, yet the island nation was none the worse for wear. That’s because prices skyrocketed, thus encouraging Chinese smugglers to devise schemes to deliver the goods off the books. Meanwhile, production in other regions rapidly ramped up while Japanese manufacturers worked out ways and means of using less of the materials.

That might have been nearly a decade ago, yet the U.S. would probably fare even better given the even larger scale of economic integration across the globe.