Rare Earths, Nuclear Arms, Energy: The 2026 Unraveling

Opening

This piece was written on January 28, 2026.

Dear reader, two months have passed since 2026 began. And in those two months, one of the safeguards holding up the global order quietly came undone. On February 5, New START—the last remaining nuclear arms control treaty between the United States and Russia—expired. Most news outlets treated it as a one-line bulletin, but it actually means something much bigger: for the first time in 54 years, the world’s nuclear powers are operating without any legal constraints at all.

And this treaty’s expiration isn’t an isolated event. Three structural shifts are unfolding simultaneously right now: China’s monopoly over rare earth supply chains, the vacuum in nuclear arms control, and the migration of energy dominance. Today I want to talk about why these three axes are all coming to a head in 2026 at once—and how to read this situation through data instead of emotion.

The First Lock: Rare Earths—Mining Them Isn’t the Hard Part

These days, one of the words showing up most often in international news is “rare earths.” Despite the name, rare earth elements¹​ are actually fairly widespread across the globe. The problem isn’t ‘mining’ them — it’s ‘refining’ them.

According to 2024 data from the U.S. Geological Survey (USGS), China accounts for roughly 69% of global rare earth mining and about 90% of refining. Countries like Australia, the United States, and Myanmar do participate in the mining stage, but when it comes to turning raw ore into materials actually usable in industry, China’s share is overwhelming. In the manufacturing of high-performance permanent magnets²​ in particular, China’s share reaches 94%.

Why did it turn out this way? The key is environmental cost. Rare earth refining consumes huge quantities of water and acid, and produces radioactive byproducts. In democracies with strict environmental regulations, building social consensus around this is extremely difficult. China, by contrast, spent decades absorbing that environmental cost to build out its refining infrastructure—and as a result, it secured technological and economic dominance along with it.

So has the U.S. just been sitting on its hands? No. In July 2025, the U.S. Department of Defense invested $400 million in MP Materials, a rare earth company based in California’s Mojave Desert, securing a 15% stake. The Pentagon became the largest shareholder in a private mining company. It also signed a contract to purchase the entirety of the company’s rare earth magnet output for the next 10 years. This isn’t just an industrial investment—it’s effectively a national security strategy to lock down a supply chain.

But there’s a number here that demands a clear-eyed look. According to an S&P Global report, the average time it takes in the U.S. to go from discovering a new mine to actual production is 29 years—the second-longest in the world after Zambia. That’s because environmental review, permitting, and litigation risk all stack up. It means that even if a new mine were discovered right now, full-scale production wouldn’t be possible until the 2050s.

That’s why the U.S. can’t escape its dependence on China in the short term. It’s also why the Trump administration, even while imposing 40-50% tariffs on Brazilian agricultural and fishery products, still sat down at the negotiating table with Brazil to secure rare earths. Pressuring a country with tariffs while simultaneously needing to court it through resource diplomacy—that contradiction is the reality the U.S. finds itself in right now.

The Second Lock: A Nuclear Arms Control Vacuum, 54 Years in the Making

On February 5, 2026, the New START treaty expired. Signed in 2010, it had capped strategic nuclear warheads at 1,550 and delivery vehicles at 700 for both the U.S. and Russia. The history of nuclear arms control treaties stretches back to the SALT I negotiations of 1969, and New START was the final link in that long chain.

Why couldn’t the treaty be extended? There’s a structural reason. New START was designed from the outset to allow only a single five-year extension, and that extension was already used up in 2021—so legally, there’s no more room to extend it. Signing a new treaty would require ratification by two-thirds of the U.S. Senate, which, given the current political climate, is close to impossible.

In September 2025, Russian President Putin proposed voluntarily maintaining nuclear stockpile limits for one year even after the treaty expired. President Trump initially responded positively, but by January 2026 he’d shifted to: “If it expires, it expires. We’ll make a better deal.” He also insisted that any new agreement must include China—even though China has never participated in any nuclear arms reduction treaty.

According to Pentagon estimates, China’s nuclear warhead stockpile has nearly tripled since 2020, now exceeding 600, and is projected to reach 1,000 by 2030. The U.S. and Russia each hold several thousand warheads including reserves, and with the treaty’s expiration, the legal constraint on growing those numbers has disappeared.

One thing worth noting here is the uranium industry. In the conversion process essential to both nuclear weapons and nuclear power, the only commercial uranium hexafluoride (UF₆) conversion plant in the U.S. is the facility Honeywell operates in Metropolis, Illinois. Built in 1958, it accounts for roughly 20% of global conversion capacity—an irreplaceable node in the nuclear supply chain.

The vacuum left by the nuclear arms control treaty isn’t just about “the possibility of more weapons.” It also means the mutual verification systems built into the treaty—on-site inspections, data exchanges, missile launch notifications—all disappear too. When transparency vanishes, uncertainty grows, and uncertainty accelerates arms races.

The Third Lock: A Quiet Shift in Energy Dominance

In the past, countries holding large oil reserves wielded geopolitical influence—the era of the “Petro State.”³​ But a new concept is emerging now: the “Electro State”—the idea that whichever country can produce electricity at scale and supply it reliably becomes the new power.

China has pursued this shift most aggressively. It dominates the world in solar panel installations, and its share of power generation from renewables has already surpassed 29%. Meanwhile, Germany fell behind in the energy transition as it decommissioned its nuclear plants, and the U.S. is only now pivoting toward expanding nuclear power and small modular reactors (SMRs)⁴​ again.

The EV market is no different. Chinese brands like Xpeng and Zeekr are rapidly expanding their market share, and European brands like Volvo have fallen under the influence of Chinese capital (Geely). Canada’s recent announcement that it would ease steep tariffs on Chinese EVs and strengthen cooperation with China is partly a diplomatic countermove against U.S. pressure, but it’s also because the competitiveness of Chinese EVs simply couldn’t be ignored.

China’s Belt and Road Initiative (BRI)⁵​ also deserves reassessment. It’s fallen short of its original goal of physical infrastructure connectivity in some respects, but it’s been quite successful in terms of energy infrastructure exports and financing for developing countries. Many countries across Africa and Southeast Asia have grown increasingly dependent on China for energy infrastructure and financing.

The Real Cost of Tariffs: Who’s Actually Paying

On top of these three structural shifts, the issue that’s most immediately felt in practical terms is tariffs. The Trump administration’s tariff policy functions as a diplomatic negotiating chip, but someone still has to pay the actual cost.

According to a 2025 Goldman Sachs analysis, 55% of the tariff burden is being passed on to American consumers, and this ratio could rise as high as 70%. Yale’s Budget Lab estimated that this would add $600 to $800 in extra costs per household annually. Data from the New York Federal Reserve showed that roughly 90% of the tariff burden falls on U.S. businesses and consumers.

The U.S. midterm elections are on November 3, 2026. Given that voters are likely to feel tariff-driven price increases most acutely just months before the election, this is also the context behind the Trump administration’s push for compensating measures like universal dividends or tax cuts running in parallel.

Europe’s Dilemma: Between Values and Reality

No discussion of this would be complete without Europe. For decades, Europe has championed the values of accepting refugees, providing international aid, and protecting the environment. But as economic stagnation has deepened over the past decade, maintaining these values has become increasingly difficult.

The Syrian refugee crisis, additional refugees following the war in Ukraine, and on top of that, the U.S. withdrawing from international institutions (the Trump administration has withdrawn from or announced withdrawal from more than 60 international organizations)—all of this burden has concentrated on Europe. With limited tax revenue that has to cover both domestic welfare and refugee support at the same time, the rise of right-wing parties across Europe can be explained structurally.

French President Macron staking his political life on dissolving the National Assembly and still struggling, Prime Minister Meloni holding power in Italy, and far-right parties expanding their influence in Germany—these phenomena aren’t simply a case of “Europe turning conservative.” They’re the result of a long-standing gap between policy and reality finally crossing a critical threshold.

Cuts to international aid budgets are already underway. The U.S. pulled out first, and Europe is following suit. The people hit first in this process are society’s most vulnerable. This isn’t a sentimental point—it’s a predictable feedback loop: aid cuts → instability in developing countries → more refugees → deepening conflict within Europe.

Oz’s Lens

Honestly, when I look at these three issues, the first thought that comes to mind is: “let’s look at the data.”

As someone who’s worked in data analysis, I know well that emotional reactions are most dangerous precisely when uncertainty is high. Feeling that “I dislike China” or “America is right” is your prerogative. But if that emotion blinds you to reading the underlying structure, you can’t prepare for what’s coming.

Not a single piece of data cited today comes from the Chinese government. The Pentagon, USGS, Goldman Sachs, S&P Global, Yale’s Budget Lab, the International Energy Agency (IEA)—all of it is official data from Western institutions. What this data tells us is clear: China holds a structural advantage in rare earth refining, energy production, and manufacturing value chains, and that advantage won’t be resolved anytime soon.

Disliking a particular country is anyone’s personal prerogative. But disliking something and underestimating it are two entirely different things. It’s the same when building a GTM strategy—the moment you dismiss a competitor emotionally, your strategy falls apart. Relations between nations aren’t any different.

As I see it, the capability that truly matters in 2026 is this: the ability to read emotion and structure separately. Whether it’s rare earths, nuclear arms, or energy dominance—read the structure the numbers reveal first, and make your judgment from there. If you’ve ever played a game like Civilization, you know: yesterday’s ally becomes today’s enemy, and today’s enemy becomes tomorrow’s negotiating partner. There are no permanent sides in diplomacy. There’s only interest and structure.

Closing

To sum up:

First, China’s 90% share of rare earth refining won’t change anytime soon. Even if the U.S. develops new mines, there’s a structural limit of 29 years before production can begin. Second, with New START’s expiration, legal constraints between nuclear powers have vanished for the first time in 54 years, and the absence of a verification system is fueling uncertainty. Third, as energy dominance shifts from oil to electricity, the influence of countries that got ahead in renewables and EVs is growing.

These three issues may look like separate matters, but they actually share one thing in common: the safeguards that held up the existing order are coming undone. In times like these, we need to practice reading the world through structure, not emotion. I hope today’s newsletter can be a starting point for that practice.

References & Further Reading

• U.S. Geological Survey, “Mineral Commodity Summaries 2024 — Rare Earths”, USGS, 2024. — the official basis for China’s rare earth mining and refining shares.
• S&P Global, “Mine Development Timelines by Country”, 2024. — the original source for the 29-year U.S. mine development timeline.
• MP Materials, “Transformational Public-Private Partnership with the Department of Defense”, July 2025. — the official announcement of the Pentagon’s equity stake in a rare earth company.
• Nuclear Threat Initiative (NTI), “The End of New START: From Limits to Looming Risks”, January 2026. — the most balanced analysis of what New START’s expiration means and what lies ahead.
• Arms Control Association, “Life After New START: Navigating a New Period of Nuclear Arms Control”, 2025. — covers the historical context of nuclear arms control and future scenarios.
• Goldman Sachs, “Tariff Cost Burden Analysis”, October 2025. — a report analyzing the share of tariff costs passed on to consumers and the impact on inflation.
• IEA, “With new export controls on critical minerals, supply concentration risks become reality”, 2025. — the IEA’s official analysis of rare earth export controls and supply chain concentration risk.
• Yale Budget Lab, “Tariff Impact on American Households”, 2025-2026. — the source for the estimated per-household tariff cost of $600-800.
• Wikipedia, “Honeywell Uranium Hexafluoride Processing Facility”. — basic information on the only uranium conversion facility in the U.S.
• Resources for the Future, “The Strategic Game of Rare Earths”, 2025. — an issue brief analyzing China’s rare earth export restriction strategy through a game theory lens.

The author, Kwangseob Ahn, is a professor of business administration at Sejong University and lead consultant at OBF (Oswarld Boutique Consulting Firm). He teaches statistics and data analysis — business data management and business analytics — while leading GTM and AI strategy consulting in the field, designing the seam between technology and business. He has published academic research on a memory architecture for AI dialogue systems (HEMA) and runs Daily Arxiv, a daily curation of global AI papers. He holds a master’s from Korea University’s Graduate School of Technology Management and a KMBA. He is the author of Homo Brainless: The People Who Outsource Their Thinking.

Footnotes

1. Rare Earth Elements: a collective term for 17 metallic elements—the 15 lanthanides plus scandium and yttrium. Despite the name, they aren’t actually “rare,” but they are extremely difficult and costly to extract and refine economically. They’re essential in semiconductors, EV motors, missile guidance systems, and more. ↩

2. Permanent Magnet: a magnet that maintains a magnetic field without an external power source. Neodymium (NdFeB) magnets are the most common example, serving as core components in EV motors, wind turbines, and data center equipment. China accounts for 94% of global production. ↩

3. Petro State: a term for countries whose economies center on oil exports. Middle Eastern oil producers like Saudi Arabia and the UAE are prime examples. As the energy transition progresses, this concept is becoming less relevant. ↩

4. SMR (Small Modular Reactor): a next-generation reactor with smaller generating capacity (300MW or less) than conventional large reactors, built in modules at a factory and assembled on-site. Because construction time is shorter and upfront investment costs are lower, development is active in the U.S., South Korea, and elsewhere. ↩

5. Belt and Road Initiative (BRI): a large-scale infrastructure and economic cooperation initiative announced by President Xi Jinping in 2013. The project aims to connect Asia, Africa, and Europe via land and maritime Silk Roads, and while it’s had less success in physical road connectivity than originally intended, it’s achieved greater results in energy infrastructure exports and development financing. ↩